Days after suspension of trading on its shares by the Nigerian Stock Exchange (NSE) along with 16 others for failing to meet the post-listing requirement, especially as it relates to timely submission of financials that would enable investors make informed decisions, directors of Equity Assurance, on Thursday, released its score-card for the year ended December 31, 2016, showing a huge increase in loss after tax on a weak 8% rise in gross premium, even as operating expenses rose by almost a quarter per cent.
The company’s underwriting profit fell 47% from N1.801bn to N953m in what the directors attributed to the 84% rise in net claims incurred from N1.029bn in the 2015 full year to N1.896bn.
Gross premium crawled from N4.47bn in 2015 to N4.836bn, 91.37% of which came from non-life business segment; gross premium income stood at N4.621bn, down from N4.776bn; while re-insurance expenses dropped slightly to N1.041bn, all from non-life, as against the previous N1.263bn, just as net premium income increased 2% to N3.58bn, with non-life insurance also contributing the lion’s share of N3.162bn, from previous year’s N3.513bn. Commission income rose to N240.549m from N147.083m, following which net underwriting income for the period stood at N3.821bn from N3.66bn.
Claims expenses (gross) rose to N2.247bn from N1.643bn; claims expenses recovered from reinsurers dropped to N351.955m from N614.083m, resulting in net claims expenses of N1.895bn from N1.029bn; even as underwriting expenses came to N972.565m, as against prior year’s N830.044m. Total underwriting expenses stood at N2.868bn from N1.859bn.
Besides the underwriting profit drop, investment income was down 2% to N563.049m from N576.916m, arising from the drop in interest received on placement held by the company with financial institutions in Nigeria for most of the period under review. Operating expense however rose to N3.433bn from N2.797bn, a situation blamed on the N432m fine imposed on the company by the National Insurance Commission (NAICOM) for violation of its guidelines on aviation businesses.
In qualifying their opinion on the account, BDO Professional Services, the external auditors noted that operating income for the period stood at N1.305bn, the bulk of which was N1.172bn representing interest written back on convertible redeemable Daewoo loan, following which exchange rate loss on the loan and interest arising during the year amounted to N730.831m and N304.518m.
Quoting company’s records, the external auditors, BDO explained that “had the interest not been written back and the exchange loss and interest recognized in the income statement, the loss for the year would been N2.459bn (Group- N2.615bn), borrowings and shareholders’ funds would been N3.343bn (Group- N3.341bn) and N2.341bn (Group- N3.142bn) respectively which is below the minimum required capital of N3bn and hence a shortfall of N850m in solvency margin.”
Meanwhile, net income from non-insurance subsidiaries dropped to N203.682m from N225.649m, investment income stood at N563.049m down from N576.916m, while profit from concessionary arrangement fell significantly from N20.544m to N4.248m. Loss on disposal of subsidiary was N29.52m; net fair value loss on financial assets dropped from N50.023m to N7.197m.
Other operating income rose from N86.205m to N1.474bn; employee benefit expenses rose to N951.816m from N682.361m, impairment loss increased to N119.878m from N82.072m; other operating expenses increased from N1.589bn from N1.93bn
Loss before tax improved to N242.462m from N508.5m in 2015; income tax expense rose to N165.211m from N93.161m, resulting in loss after tax of N407.673m, down from N601.661m, which translates to loss per share of 3.3 kobo, down from 6.9 kobo in the prior year.