What you need to know:
- The impact of various measures instituted by government to curtail the spread of Covid-19 has caused business disruptions, resulting into the decline of gross written premium for the period.
- An insurance premium is an amount payable for an insurance policy such as healthcare, auto, home, and life insurance, among others.
- Despite challenges arising from the implementation of the no cash, no cover principle, which had been further compounded by the lockdown of business activities, NIC had weathered on and is optimistic of the next half of the year.
National Insurance Company (NIC) experienced a drop in written premiums for the period ended June.
The drop was attributed to Covid-19, which during the period forced a slowdown in economic activities across different sectors of the economy.
In the first half 2020, NIC recorded a fall in written premiums, which dropped by Shs40m from Shs9.37b in the same period 2019 to Shs9.33b.
An insurance premium is an amount payable for an insurance policy such as healthcare, auto, home, and life insurance, among others.
In a joint statement published along with NIC’s financial results, Dr Alan Shonubi the company’s chairman and Mr Bayo Folayan, the NIC managing director, said the impact of various measures instituted by government to curtail the spread of Covid-19 had caused business disruptions, resulting into the decline of gross written premium for the period.
“The closure of schools and countrywide lockdown severely affected the long-term business thereby recording a drop of 28 per cent in gross written premium, while the non-life business had a minimal growth of 3 per cent,” the statement said.
However, the insurer noted, necessary measures had been put in place to turn around the negative growth in the second half of 2020.
During the period investment and other income grew to Shs2.06b up from Shs1.848b in the same period in 2019, representing a 12 per cent growth.
This was mainly attributed to an increases in interest income and gains from asset disposal and foreign currency transactions.
Management expenses and impairment provision reduced to Shs5.016m down from Shs5.963m during the period.
Dr Shonubi indicated that due to greater focus and control, management expenses reduced by 16 per cent in the period to June while profit be-fore tax and profit after tax increased by 158 per cent and 257 per cent respectively due to reduction in net claims.
Shareholders' equity grew by 7 per cent as a result of the retained earnings for the period from Shs33.15b as of December 2019 to Shs35.57b in the period to June. However, total assets declined to Shs91.3b from Shs94.9b.