The Enterprise Group Plc has recorded a 16 percent decrease in profit after tax (PAT) for year 2021, despite the 37 percent increase in net revenue over the period compared to the GH₵1.16billion inflows in 2020.
This decline in profits was largely influenced by a whopping 72 percent year-on-year increase in claims payments.
This was made known to shareholders of the organisation at the annual general meeting (AGM) to review the Group’s performance for the year ended 31 December 2021.
Chairman, Enterprise Group Plc, Trevor Trefgarne, in his remarks indicated that the increase in benefits and claims payments was occasioned largely by high surrenders and early encashment from life operations.
“Our underlying net profit after tax was GH₵122.85million – a decrease of 16 percent on the previous year, reflecting the high claims payments made during the year. In addition to this was the additional reserve required in response to the improved investment income to cater for future customer benefit payments,” he said.
Nonetheless, the group recorded strong growth in most of its portfolios: with key drivers of its net income being a 28.8 percent growth in insurance premium revenue; a 53 percent growth in funeral services fees; and a 29 percent growth in pension fees. Additionally, investment income increased by 83 percent and rental income went up by 134 percent.
In respect of that, the group declared a 20 percent increase in shares over the 2020 dividend per share paid. “The Board is pleased to recommend a first and final dividend of GH₵0.0744 per share for 2021 – an increase of 20 percent over the 2020 dividend,” the chairman stated.
Group Chief Executive Officer-Enterprise Group, Keli Gadzekpo, responding to the impact of this happening in an interview with the media indicated that this did not come as a surprise; because in 2020, during the pandemic’s peak, claims were very low and so this seems to be a reflection of some claims that were more or less not applied for.
“In the 2020 COVID-19 year, there was a dip in our claims and we were wondering what’s going on; and then in 2021 we saw the increase, so our interpretation is that the pass-through effects of 2020 have come to pass in 2021 so there is no cause for alarm,” he said.
The Enterprise Group’s total assets increased from GH₵1.7billion to GH₵2.1billion during the year; a 23.9 percent increase driven by growth in investment securities.
In terms of expanding market reach for the business, the CEO indicated that the group has expanded its footprints in the West Africa sub-region by officially penetrating the Nigeria market.
“Our Nigeria business started operation in March 2021, with a clear strategy focusing initially on the retail market of life insurance,” he said.
With the new Insurance Act of 2021 (Act 1061) coming into effect in the year under review, and the regulator – the National Insurance Commission – demanding recapitalisation to new minimum capital of GH₵50million by December 2021, the CEO informed shareholders that both the Life and Non-life Insurance companies of the group met the minimum capital requirement before the deadline.