Insurance giant- African Alliance Plc, on Monday presented its audited financials for the year ended December 31, 2016, indicating a return to profit from a loss before and after tax, despite a drop in gross premium written and net premium revenue.
The directors did not recommend payment of dividend, given that the company reported total retained loss of N22.149bn for the period, as against prior year’s N24.741bn.
However, without qualifying its opinion, Anuebunwa Jude & Co., the company’s external audited drew attention to a shortfall in the company’s solvency margin of N2.607bn, which “is below the minimum regulatory capital of N2bn required for life insurance business.”
The auditors also called attention to the total admissible assets of African Alliance less the net insurance and investment contract liabilities, which it said was a deficit of N2.233bn as at December 31, 2016.
“These conditions indicate the existence of a material uncertainty that may cast doubt on the company’s ability to continue as a going concern,” the auditors stressed.
Gross premium written for the period dropped by 5% from N14.98bn to N14.258bn; gross premium income rose from N14.442bn to N14.713bn; reinsurance expense fell to N35.162m from N42.144m, leaving net premium income at N14.678bn, a 2% rise over previous year’s N14.4bn; net underwriting income for the period came to N14.691bn, as against the preceding year’s N14.412bn. Claims expenses rose from N5.088bn to N7.271bn; reinsurance claims increased from N6.574m to N9.455m, resulting in net claims expenses of N7.261bn, up from N5.082bn; while changes in contract liabilities of N5.146bn, down from N13.067bn.
Total underwriting expenses dropped slightly to N1.069bn from N1.216bn, following which underwriting profit climbed 125% to N1.214bn, from a loss of N4.954bn; total investment income also recorded a significant 80% increase from N1.802bn to N3.25bn.
Administrative/operating expense was flat at N2.391bn from N2.385bn in the corresponding period of 2015.
Profit before tax stood at N3.361bn, 171% better than previous year’s N4.744bn loss; just as the tax expense of N340.417m, almost double the preceding year’s N197.236m, left profit after tax of N3.021bn, which was 161% better than prior year’s N4.9421bn, translating to earnings per share of 14.68 kobo, compared with the 24 kobo loss recorded in the 2015 full year.