WAICA Re underwriting profit rises by 77% in 2020

L – Right: The Director-General, WAICA Secretariat and Directorate, WAICA Reinsurance Corporation Plc, Mr. William B. Coker; Director, Mr. Adeyemo Adejumo; Company Secretary, Mrs. Patricia Fomba; Group Chairman, WAICA Reinsurance Corporation Plc, Kofi Duffuor; Group Managing Director/CEO, Abiola E. Ekundayo; and a Director, Mrs. Senor Thomas-Sowe, during the corporation’s annual general meeting in Lagos

The West African Reinsurance Corporation (WAICA Re) has announced that its underwriting profit grew from US$5.0million in 2019 to US$8.8million in 2020, a growth rate of 77 percent

The company at its 8th Annual General Meeting (AGM), held virtually at the weekend, recorded a net claims of US$30.5million in its 2020 financial year, which translated to a 63 percent increase from the US$18.7million it recorded in 2019.

The claims were incurred across most of the nine countries it is operating from. The nine countries include Nigeria, Ghana, Liberia, Kenya, Sierra Leone, Tunisia, The Gambia, Zimbabwe and Côte d’Ivoire.

The Group Chairman, Kofi Duffuor, added that facultative claims contributed 59 percent of the total claims paid while treaty claims were 41 percent – stressing that the net incurred loss ratio increased to 39 percent in 2020 compared to 31 percent in 2019.

Underpinned by an increase in business volumes and increased claims reserve, net claims incurred increased by 63 percent to US$30.5million in 2020 from US$18.7million in 2019. Facultative claims contributed 59 percent of total claims paid while treaty claims were 41 percent. Consequently, the net incurred loss ratio increased to 39 percent in 2020 compared to 31 percent in 2019.

To him, “Net commission expense rose to US$23.5million in 2020 from US$17.6million in 2019, representing 33 percent growth – largely as a direct function of growth in earnings. The commission ratio also remained flat at 30 percent, in line with both company trend and industry averages”.

Operating expenses, he said, decreased year on year by 4 percent, given management efforts to reduce cost; hence, operating expenses fell to US$17.1million in 2020 from US$18.2million in 2019 even as expense ratio equally fell to 22 percent in 2020 from 31 percent in 2019.

Overall, combined ratio improved to 91 percent in 2020 after having fallen from 93 percent in 2019, he pointed out.

Stressing that WAICA Re has continued to display a strong underwriting profitability as a result of sound underwriting and risk selection, he noted that technical profit grew from US$23.2million in 2019 to US$26.2million in 2020, representing a 13 percent growth.

“Underwriting profit grew from US$5.0million in 2019 to US$8.8million in 2020, a growth rate of 77 percent. While Technical margin fell from 40% in 2019 to 33 percent in 2020, underwriting margin improved from 9% in 2019 to 11 percent in 2020,” he pointed out.

Stating that the reinsurer’s investment and other income witnessed an increase of 14 percent from US$3.4million in 2019 to US$3.9million in 2020 – even though there was a general fall in interest rates, especially in Anglophone West Africa – he added that return on investment fell from 4 percent in 2019 to 3.7 percent in 2020.

To him, “Management continues to review the investment portfolio to help improve the return on investment.

“The above Profit and Loss analysis shows that the major drivers of profit in 2020 were the growth in premium income, improved underwriting performance, and a reduction in management expenses.”

Improved premium collection, he stressed, enabled the group to increase cash and investment assets by 29 percent to US$114.9million in 2020 from US$88.9million in 2019.

The group’s cash and investment assets, he stated, account for 62.5 percent of total balance sheet size. Liquid assets increased to US$105.2million in 2020 from US$79.3million in 2019, giving the group strong liquidity metrics compared to claims and technical liabilities, he said.

He announced to US shareholders that the board of directors recommended a dividend of 0.0814 per share amounting to US$4,000,000 (2019: US$3,000,000).

This dividend will be paid to shareholders whose names appear in the register of the Corporation as at the date of the AGM, he assured.

The board of the firm, he said, recommended the issuing of additional capital of 10 million shares in 2020 by a rights issue at a price to be determined by its financial advisors.

“There was also the intention to invite strategic investors to take up shares in the Corporation. These decisions were suspended due to the COVID-19 pandemic and the uncertainties that surrounded it.

“This year we would like to carry out the exercise, as it will strategically position the corporation to underwrite larger businesses – especially in the oil and gas sector among others; and expansion of our ICT as well as ensuring a strong balance sheet that will make us more competitive in the reinsurance market,” he said.

Leave a Reply