Reduced costs help Mutual Assurance revert to profitability

The ability of the management of Mutual Assurance Nigeria plc to trim costs has helped the insurer revert to the path of profitability, analysis of its financial statement shows.

The audited 2013 financial statement o released on the website of the Nigeria Stock Exchange (NSE) showed the Nigeria Insurer posting a profit before tax of N911.07m from N3.07bn losses recorded in the corresponding period (FY) of 2012.

Similarly, a profit after (PAT) of N555.75m in FY 2013 was recorded compared with a loss of N3.39bn recorded the preceding year.

Analysts attribute the Nigeria insurer’s impressive performance at the bottom line level to effective cost control mechanism by its management as operating expenses were down by 20.1 percent to N5.84bn in the review period from N7.31bn the preceding year.

However, there was slight reduction at the top line level as Gross premium income (GPI) reduced by 3.90 percent to N7.68bn as against N7.98bn the preceding year, while net premium income fell by 9.79 percent to N6.72bn.
 

Underwriting expenses increased by 7.52 percent to N4.30bn as against N4.65bn the same period of the corresponding year (FY) 2012.

Total assets surged by 27.22 percent to N2.38bn compared with N1.87bn the preceding year – thanks to a 140.26 percent surge in cash and cash equivalent and a 26.59 percent rise in loans and receivable.

Total equity also increased by 27.22 percent to N2.38bn in the review period from N1.87bn in 2012.

It will be recalled that the Insurer established a micro finance bank (MFM) to promote its micro-insurance offerings, which carry premiums as low as NGN 50 (USD 0.30) per three day period covering up to NGN100,000 (USD 600) in hospital expenses and in the event of loss of life.

Furthermore, it also signed a Memorandum of Understanding (MoU) with members of the Finance Correspondents Association of Nigeria (FICAN) for a Group Personal Accident insurance cover.

This cover which became effective January 1, 2014 covers medical, permanent disability and Death resulting from accident. The policy which is renewable annually and covering initial 72 members of the Association, according to industry players provides a moral boost for journalist considering the critical nature of their job and profession.

Mutual Assurance’s share price closed at N0.5 on the floor of the NSE while market capitalisation was N4bn.