Excess claims payment and underwriting expenses push Linkage Assurance to print N4 billion loss in 2021
Linkage Assurance Plc reported a loss of N4 billion for the year 2021 due to overpayment and increased underwriting profit during the period.
According to the company’s audited financial report, the insurer garnered a total gross premium income of N10.4 billion in 2021, an increase of 31% from the amount used for the same purpose in 2020, but spent 8.8 billion naira of this amount in claims. expenses (5 billion naira) and underwriting expenses (3.8 billion). This means that 85% of the GPI was related to claims settlement.
The result though is that the year 2021 is a year of recovery for many organizations and industries from the pandemic in 2020. In addition to Covid, the Nigerian insurance space has however suffered a snowball consequence from the #protest EndSARS which led to the destruction of life and property. – The Association of Nigerian Insurers recently announced that over N11 billion has been paid out as claims for losses suffered during the 2020 #EndSARS protests.
The insurer said the company suffered an underwriting loss of 2.5 billion naira due to increased technical expenses, with the pre-tax loss amounting to 3.9 billion naira in December 2021 against a profit of 2.5 billion naira in the previous period, the main factor being the increase in claims costs and the loss of FV on bond investments.
- Gross written premium stood at N11 billion in 2021, which is N2.8 billion more than the amount in the same period the previous year at N8.3 billion
- Reinsurance expenditure skyrockets by 43% over the study period from N3.5 billion in 2020 to N5 billion in 2021, driving net premium income to N54 billion vs. 4.5 billion naira.
- Fee and commission income increased from N626 million to N834 million in 2021, while net underwriting income stood at N6.3 billion, a high of 23% from 5.1 billion naira the previous year.
- However, high net claims charges and underwriting expenses pushed the underwriting result to a negative 2.6 billion naira in 2021 from the record positive 826 million naira the previous year.
- Investments and other income fall 66% to close at N1.3 billion in 2021 from N3.9 billion in 2020
- During the period, the insurer also paid more attention to management as management expenditure in 2021 was 2.7 billion naira compared to 2.1 billion naira during the Covid year.
What you should know
Bond Insurance traded at 0.51 Naira while its market capitalization stood at 7.4 billion Naira as of Thursday, April 7, 2021.