Cornerstone Insurance Plc has achieved 25 percent growth in its gross premium written which rose from N7.3 billion in 2015 to N9.1 billion at the end of the financial year 2016.
The Group Chairman, Mr Segun Adebanji while addressing the company’ s 25th annual general meeting (AGM), in Lagos said sales to retail customers accounted for 25 percent of premiums while Special Risks products to the Oil & Gas and Engineering sectors contributed the second highest proportion at 23 per cent.
The Chairman said the increased financial strength of the conclusion of the acquisition of Fin insurance and their growing reputation as a credible partner is now opening the opportunity for the leadership position on major transactions as well as provide support for our retail expansion.
He, however, said that high claims inflation and the security challenges in the North-East and South-South zones of the country led to a significant deterioration in the claims experience during the year under review.
Gross claims rose by 61 per cent to N4.5 billion when compared from the previous year of N2.8 billion in 2015, this he attributed largely by death claims from the group life, credit life and third party motor classes of insurance.
The company has also carried out a comprehensive portfolio review and corrective actions taken to improve terms and conditions, reduce participation or exit the business as appropriate.
The group total asset grew to N21,436,369 billion in 2016 as against N20,968,781 billion reported in same period of 2015.
While net investment income increased by 98 percent from N.74 billion in 2015 to N1.47 billion in the year under review, this he said is mainly due to the consolidation of the investment income of the subsidiary.
Unlisted equities portfolio he said suffered significant impairment while the financial commitment on its new head office building constrained the liquidity that would have benefited from attractive yields on short-term instruments. Similarly, the rising cost of goods and services, coupled with the first-time consolidation of the operations of the subsidiary led to a 45 percent increase in management expenses.”
“significant investments are being made in improving the technology and distribution infrastructure to support the company’s retail strategy.
Agency network almost doubled from 832 to 1,600 agents while a robust platform has been built for the rollout of the bancassurance channel.
“These costs are being accounted for in the current financial statements, we expect the benefits to accrue over several accounting periods.”
Speaking on the future outlook, he said: “Even though the country is not out of the recession yet, the early signs give cause for cautious optimism that the worst may be over and economic activity may begin to improve.”
He said the full effects of the government’s plans would have trickled down by the second half of the year and economic activity is expected to pick up by then.
“We have also seen early signs of greater collaboration amongst the financial services regulators which should lead to the satisfactory resolution of impediments in the areas of new products and distribution channels, especially bancassurance and annuity.
On the industry, he noted that the prospects for the Insurance industry are slightly positive with potential for moderate growth.
He said the company has put in place additional cost management and revenue enhancement measures to ensure a quick return to profitability, adding that strict cost control measures on management expenses have been put in place and will be closely monitored as the year progresses.
He further said that plans are in on to diversify sources of revenue into allied industries with higher profit margins.
On the company’ s head office he said: “The Company made significant progress on our new head office under construction. When completed, we will operate from a complex befitting our status as a leading insurance player as well as obtain investment income from lettable floors,” he assured.