53 Insurance Companies Expend N116bn On Management From N324bn Income

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By ZAKA KHALIQ, Lagos

Fifty three insurance companies in the country expended a whooping N116 billion on their respective management, translating to 40 per cent of their premium income of N324 billion made in the last financial year, LEADERSHIP can exclusively reveal.

This happened while some of the affected firms had not given good returns on investment to their respective shareholders in the last four to five years. Further findings show that some of the underwriting firms had their accounts in the negative, after they had expended a huge chunk of their profit on management expenses, as well as paying claims.

A document obtained from the National Insurance Commission (NAICOM) shows that in the Non-Life business, 43 non-life insurers spent N100.9 billion on management expenses, translating to 50 per cent of the Gross Premium Income of N201.5 billion made in the 2016 financial year end.

Mutual Benefits Assurance PLC spent a whooping N4.7 billion on management expenses from a Gross insurance firm with just N560 million profit, after claims and management expenses were withdrawn Premium Income of N6.5 billion, meaning that, it expended 65 per cent of its profits on its management. Moreover, it also paid over N1 billion claims, thus, leaving the from the premium Income.

Moreover, AXA Mansard Insurance Plc also expended N4.7 billion on management expenses from N13.83 billion Gross Premium Written, translating to about 30 per cent of its premium income.

Followed closely is Staco Insurance PLC with N3.4 billion management expenses from a gross premium Income of N5.7 billion, translating to 60 per cent of its premium income. It also paid claims of N2.2 billion from its Income, thus, leaving the firm with a paltry over a N100 million profit after these deductions were made.

Both Mutual Benefits and Staco Insurance Plc, Leadership investigation revealed, have paid no meaningful dividend to their shareholders in the last three to four years and this might continue in their next financial year, according to market observers.

On the fourth spot is Custodian & Allied Insurance Company Ltd, who expended N2.7 billion on its management, translating to about 15 per cent of its premium income of N17.2 billion. Market observers believe the firm is prudent considering the fact that it made a huge premium Income of N17.2 billion.

In the same vein, the remaining 10 life insurers who were into Life business were more prudent than their counterpart doing General Insurance Business, as they only spent about 12 per cent of their Gross Premium Written of N124.5 billion on their management. To this end, the 10 life underwriters expended N15.1 billion on management expenses.

Leading the pack is FBN LIfe Insurance who spent N2.3 billion of its N9.9 billion Gross Premium Income on management expenses. This translates to about 20 per cent of its profits, which analysts said, is considerate.

Mutual Benefits Life Assurance Ltd came second, expending about 48 per cent of its Gross Premium Income of N4.1 billion on its management. To this end, its management in 2016 financial year spent N1.9 billion, even as the company had to pay N2 billion claims, leaving the insurance firm with profit of about N200 million.

The third firm with the highest management expenses is Old Mutual Nigeria Life Assurance Company, whose management expenses is even more than its premium Income. The company spent N1.8 billion on management expenses, whereas it Gross Premium Written was N1.3 billion, even as it paid N647 million claims, leaving its account in negative of over N1 billion.

LEADERSHIP learnt that the sum of N294.90 billion was spent on management expenses within five years by insurance companies, precisely, between 2010 and 2014.

A report obtained from the Nigerian Insurers Association (NIA), revealed that non life operators incurred N220.91 billion and life operators spent N73.99 billion between 2010 and 2014.

According to the report, Non Life insurance companies spent N52.12 billion on management expenses in 2014, representing 0.28 per cent of the N184.97 billion gross premium income made in the year. Life operators spent N23.60 billion, 0.22 per cent of N108.58 billion gross premium income.