The first quarter interim financial report of the company for the period ended March 2023 shows exceptional strength on the earnings track this year that could beat last year’s closing profit by half a year.
Last year, the risk underwriting firm recovered from a profit drop from N5 billion in 2020 to N4.4 billion in 2021 and attained a new profit high of N5.4 billion for the year.
The boost for the bottom line in the first quarter came from two major cost reductions in the face of a moderate increase of 7.4 percent in gross premium earned to less than N12.8 billion.
The cost reductions include the slashing of reinsurance expenses from N2.7 billion to slightly over N1 billion over the review period. That helped to stretch out the outgrowth in net premium income at 27.6 percent to N11.7 billion for the first quarter.
A sharp drop in fees and commissions from N491 million to N72 million over the period constrained the increase in net underwriting income to 21.9 percent to close at N11.8 billion for the quarter.
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The second cost reduction came from claims expenses that dropped by 13.5 percent year-on-year to N2.9 billion. The drop in claims expenses helped to dilute an increase of 29.7 percent in underwriting cost – which amounted to roughly N4.7 billion at the end of the quarter.
The net effect is substantial cost moderation that permitted a leap of over 55 percent in underwriting profit to N4.2 billion in the first quarter.