With mounting gross claim expenses and increase in gross premium written, Axa Mansard Insurance Plc reported decline in profits to underline a challenging operating environment.
On declaring decline in profit, the listed insurance company that experienced a volatile earnings season in the financial year ended December 31, 2021 boosted its dividend payout to shareholders to remain as one of the most fundamental insurance stocks on the Nigerian Exchange Limited (NGX).
Reporting a profit after tax decline of 17.02 per cent to N3.74 billion in 2021 from N4.5 billion reported in 2020, the management of Axa Mansard Insurance proposed a dividend of N0.25 kobo per N2.00 kobo ordinary share, subject to appropriate withholding tax and approval will be paid to shareholders.
The company in 2020 audited financial statement declared a dividend of 5.5 kobo per 50 kobo ordinary share.
However, profit before tax also dipped by 4.3 per cent to N5.78billion in 2021 from N6.04 billion reported in 2020
The composite risk underwriter’s profits over the last five-year have witnessed consistent growth in Gross written premium and Net premium income but mounting claims expenses (gross) played a critical role in profits reported in 2021 financial year.
Claims expenses
A major development on the claims expenses (gross) front caused the backward swing in profits declared in 2021 as it covered 48.16 per cent gross premium written as against 44.5 per cent in 2020.
Axa Mansard Insurance with 26.5 per cent increase in gross premium written to N60.19 billion in 2021 from N47.58 billion reported in 2020, closed the year under review with claims expenses (gross) of about N28.93 billion in 2021, representing 37 per cent increase from N21.18 billion reported in 2020.
The Non-life Business segment of Axa Mansard Insurance contributed 47.03 per cent or N28.31 billion of its gross premium written in 2021, while Life business added 15.4 per cent or N9.24 billion to its gross premium written. In addition Insurance segment in 2021 contributed 62.4 per cent or N37.55 billion, while Health maintenance added 38 per cent or N23.01 billion to gross premium written in 2021 financial year.
The group closed 2021 financial with Gross premium income of about N55.72 billion, representing 22.4 per cent from N45.5 billion in 2021, while Reinsurance expenses rose by 35 per cent to N18.58 billion in 2021 from N13.8 billion in 2020.
The interplay between gross premium income and reinsurance expenses positioned the group’s Net premium income to N37.14 billion in 2021 from N31.72 billion in 2020.
With the growing claims expenses (gross), the insurance company in 2021 reported Net-underwriting expenses of about N29.77 billion, representing an increase of 15 per cent from N25.94 billion reported in 2020.
The group reported 23.3 per cent increase in operating expenses to N9.3billion in 2021 from N7.56 billion in 2020, driven by 28 per cent increase in employee benefit expense that moved from N2.9 billion in 2020 to N3.37 billion in 2021.
The increase in total operating expenses dragged Axa Mansard Insurance operating income to N6.07 billion in 2021, representing a decline of 11 per cent from N6.82 billion reported in 2020.
In 2021, the company paid N2.05billion in tax expenses, an increase of 33.3 per cent from N1.54billion in 2020.
From the profit & loss position, Axa Mansard Insurance closed 2021 with Earning Per Share of N0.35 from N0.53 kobo per share in 2020 financial year.
Q1 2022 Mirrors Prior Year’s Performance
The company performance in first quarter ended March 31, 2022 reflected prior’s year outcome when profit before tax and profit after tax dropped by 84 per cent and 85per cent respectively.
Axa Mansard Insurance saw its profit before tax dropping significantly to N470 million in Q1 2022 from N2.92 billion in Q1 2021, while profit after Tax was at N390 million in Q1 2022 from N2.63 billion in Q1 2021.
The decline in profits is a also a reflection of 31 per cent increase in claim expenses (gross) to N8.43 billion in Q1 2022 from N6.42 billion in Q1 2021.
The company reported 14 per cent increase in gross written premium to N28.64 billion in Q1 2022 from N25.08 bn in Q1 2021, while Net premium income closed Q1 2022 at N111.57 billion representing an increase of 39 per cent from N8.34 billion in reported in Q1 2021
Axa Mansard Insurance saw its Investment and Other Income dropped by 25 per cent to N1.23 billion in Q1 2022 from N1.64 billion in the first quarter of 2021.
Financial position stays strong
Statement of financial position highlights showed total assets of N118.52 billion as of March 31, 2022, up 14 per cent from N104.06 billion in 2021.
The group reported insurance liabilities of N50.91 billion, up 38 per cent as of March 31, 2022 from N36.93 billion reported in 2021, while group shareholders’ funds stood at N31.54 billion, up five per cent from N30.07 billion as of December 2021
AXA Mansard’s financials at the end of the first quarter (Q1) of 2022, the Chief Executive Officer, AXA Mansard Insurance, Mr. Kunle Ahmed in a statement said “We have begun the fiscal year 2022 on a solid footing, although we recorded a temporary setback on PBT despite growing revenue by double digit, this reflects the macroeconomic uncertainties that continue to plague our business environment.
“The fundamentals of our business remain strong, and we remain optimistic that, with the support of our partners, we will deliver on our growth numbers on revenue and profitability at the end of the year.”
The Chief Financial Officer, Mrs. Ngozi Ola-Israel in a statement said, “We delivered double-digit revenue growth of 14per cent year-on-year (YoY) from N25.07 billion to N28.64 billion and 39 per cent year-on-year net income growth from N8.34 billion to N11.57 billion in the first quarter despite a challenging macroeconomic environment.
“We grew our Life and Health businesses by 58 per cent and 24 per cent respectively whilst our P & C business dipped 5 per cent as a result of large unrenewable business written in 2021 and deliberate careful selection of risk in 2022.
“The decline of 84 per cent and 85 per cent respectively in the PBT and PAT is largely driven by higher claims experienced in our health portfolio coupled with fair value losses and foreign exchange losses. The core underlying earnings (excluding fair value gains/losses, capital gains/losses and foreign exchange movements) dipped by 22 per cent mainly driven by the higher claims experienced in our Health portfolio. Across all lines of businesses we continue to build necessary actuarial reserves to ensure we have a strong balance sheet.
“Looking forward into the rest of the year, we remain optimistic of the value creation possibilities that exist within our business areas and with the continued support of shareholders, customers, and the dedication of staff and other key stakeholders, we will deliver excellent underwriting, investment, and operating performance as we prioritize providing value to our valued customers.”
