Mansard Insurance doubles investment income, lifts profit
Mansard Insurance lifted profit in the third quarter, as outstanding growth in investment income more than compensated for inability to grow premium income. Net premium income grew only moderately during the period and increased underwriting expenses prevented any improvement in underwriting profit. Investment income however provided the strength for the company to absorb increased underwriting cost and raise profit by more than one-half at the end of the third quarter.
The company's core business of underwriting failed to provide the spur for growth as per the third quarter interim at the end of September. Net premium income improved by 5.0% to N5.36 billion year-on-year at the end of the third quarter.
Full year estimate indicates net premium income in the region of N7.8 billion for Mansard Insurance in 2013. That will be an increase of about 10% over the net premium income of N7.1 billion in 2012. The company had achieved an increase of 17% in net premium earned in the 2012 full year.
Total underwriting income also grew at the same rate of 5.0% to N6.13 billion at the end of the third quarter. The company saved some cost in respect of claims expenses but underwriting expenses claimed all the revenues saved. Net claims expenses grew by 3.0% to N2.42 billion while underwriting expenses rose well above underwriting income at 23% to 1.36 billion.
Total underwriting expenses rose ahead of underwriting income at 9.0% to N3.78 billion compared to 5.0%. That resulted in a flat growth in underwriting profit at N2.35 billion at the end of the third quarter.
Investment income provided the strength for the company to grow profit during the review period. This is in line with the preceding year when investment income nearly tripled at 190% to N2.4%. A windfall came from net fair value gains on financial assets, which surged up from only N29 million in the corresponding period in 2012 to N1.05 billion at the end of the third quarter.
Net realised gains on financial assets provided another windfall, advancing from less than N51 million to N257 million over the same period. Total investment income grew by 108% to about N2.28 billion at the end of the third quarter. It therefore accounted exclusively for the 34% growth in net income at N4.62 billion during the period.
Management expenses moderated during the period relative to net income, which impacted favourably on the bottom line. Total expenses grew by 23% to N2.55 billion compared to the increase of 34% in net income. The moderation was led by a drop of 63% in provisions, which enabled after tax profit to grow by 51% to N1.85 billion at the end of the third quarter.
Based on the growth rate in the third quarter, full year net profit is estimated at N2.8 billion for Mansard Insurance in 2013. This will be a strong growth of 75% from the after tax profit figure of N1.6 billion the company posted in 2012. It had raised profit by 66% in the year.
The company earned 12 kobo per share at the end of the third quarter, up from 9 kobo in the corresponding period in the preceding year. Earnings per share is estimated at 17 kobo for Mansard Insurance at the end of 2013.
The company paid an interim dividend of 4 kobo per share on 22nd October last year. It paid a total dividend of 11 kobo per share for its 2012 operations. A final dividend of 7 to 8 kobo may be expected from the company for its 2013 operations.