Increased cost in the books of NEM Insurance Plc wiped out growth in gross written premium for the first quarter ended March 31, 2017, following which net profit for the period slumped by 73.61%, threatening the possibility of the directors to propose a dividend at the end of the year, just as the market reactions may not allow for capital appreciation, only there is a drastic change in the situation over the coming months.
Gross premium written for the period rose by N1.174bn or 29.27% from N4.013bn to N5.187bn; while unearned income increased to N2.559bn from N1.401bn.
This resulted in gross premium earned of N2.628bn, which was flat, compared to previous first quarter’s N2.611bn; reinsurance expenses jumped by N830.033m or 1,016.26% from N81.675m to N911.708m; net premiums income however dropped to N1.717bn from N2.529bn, representing a decline of about N812m or 32.1%. Fee and commission income for the period soared from N13.872m to N235.067m, following which net underwriting income stood at N1.952bn, down by N577m or 22.68% from N2.543bn. Claims expenses for the period dropped to N439.907m, from the previous N1.317bn; underwriting expenses rose to N885.634m from N618.666m, leaving underwriting profit at N1.506bn, down by N1.736bn or 53.54% from N3.242bn in the first quarter of 2016.
Other operating and administrative expenses rose to N865.605m from N584.795m; following which profit before tax took a plunge from N2.711bn to N715.456m. Net profit could have been lower than the N604.56m, representing a drop by N1.687bn or 73.61% from the previous N2.291bn, if it were not for the sharp drop in income tax from N420.353m to N110.896m.