Insurance

GCR Assigns Lasaco Assurance Plc Stable Outlook A-(NG)

Published

3 years ago

August 13, 2021

GCR Ratings (“GCR”) has assigned an initial national scale financial strength rating of A-_(NG)to Lasaco Assurance Plc, with a Stable Outlook.

Rated Entity / Issue	Rating class	Rating scale	Rating	Outlook / Watch
Lasaco Assurance Plc	Financial strength	National	A-_(NG)	Stable Outlook

Rating Rationale

The rating accorded to Lasaco Assurance Plc (“Lasaco”, “the insurer”) reflects the insurer’s moderately strong financial position, which partly offsets its limited competitive position in the highly fragmented Nigeria insurance industry.

Lasaco’s competitive profile somewhat constrains the rating. Lasaco is a mid-tier composite player within the Nigerian Insurance industry, with a track record of over four decades. The insurer controls an estimated market share and relative market share of 2.2% and 1.2x respectively as at FY20 based on total gross written premiums (“GWP”) of the industry. The premium base is somewhat concentrated, with group life business dominating premium mix over the review period with 60% contribution. This is somewhat offset by a diversified portfolio in the short-term business, with four lines of business contributing over 10% to the gross premium base. Going forward, the insurer’s competitive position is expected to be maintained within the same range, supported by entrenched market relationships with intermediaries and policyholders.

Earnings are at an intermediate level, with net profit supported by market sensitive income. In this regard, profitability in FY20 is underpinned by investment income and the highly volatile foreign exchange (“FX”) gains. Characterised by the low yield environment in 2020, largely due to the pandemic, investment income declined notably by 24.2% year on year (“YoY”) in FY20. This, coupled with an increase in net claims during the year, resulted to a moderation in operating margin. Looking ahead, given the strategic plans put in place, we expect planned premium growth to improve portfolio quality and support the volatile investment income, which in turn should result in earnings stability.

Lasaco’s capital adequacy is a positive rating factor. Though a slight 2.2% YoY decline in capital was reported at FY20 due to revaluation losses, capitalisation metrics remained strong. Both the international solvency and GCR capital adequacy ratio (“CAR”) were maintained well above 100% and 2.5x respectively over the review period, evidencing good loss absorbing capacity. The insurer plans to increase its shareholders’ funds by about N10bn over the medium term to enable participation on big policies, support business growth, and better position the insurer. This could be supportive to the rating should it be successfully implemented, with evidence of good capital management structures.

Liquidity is assessed within a relatively low range, given the fact that investment properties constitute about 22.5% of the investment portfolio at FY20 (FY19: 26%). That said, cash and stressed assets coverage of net technical liabilities registered a moderation to 1.3x at FY20 (FY19: 1.7x) due to cash absorption by reinsurance receivables. Similarly, operational cash coverage moderated to 10 months (FY19: 13.5 months), pressured by a spike in net claims incurred. Liquidity metrics are expected to improve over the near term based on the planned capital injection.

Outlook Statement

The Stable Outlook reflects GCR expectation that Lasaco will defend its competitive position as it deepens its relationship with the Lagos State, being the major shareholder. GCR expects the planned capital raise to improve the liquidity position over the next 12-18 months, while investment properties generate healthy returns for the insurer. we expect planned premium growth to improve portfolio quality, and support the volatile investment income, which in turn should result in earnings stability.

Rating Triggers

Positive rating action may stem from sustained improvement in earnings supporting a strengthening in liquidity and/or capitalisation. Conversely, a negative rating action could be triggered should investment property continue to dominate the investment portfolio without generating returns, with liquidity metrics moderating further. In addition, a sustained weakening in capitalisation and loss of market share would be negatively considered.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Insurance

Heirs Insurance Group Unveils Revolutionary Website for Seamless Insurance Experience

Published

4 weeks ago

March 27, 2024

Samed Olukoya

Heirs Insurance Group has launched a website designed to revolutionize the insurance experience for its customers.

With a focus on simplicity, accessibility, and personalized service, the new website aims to streamline the process of obtaining insurance coverage and empower customers to make informed decisions about their insurance needs.

The website boasts a range of innovative features that make navigating insurance options easier than ever before.

From simple and intuitive navigation menus to personalized insurance recommendations, the website is designed to guide customers through every step of the insurance process quickly and efficiently.

According to Ifesinachi Okpagu, the Chief Marketing Officer of Heirs Insurance Group, the new website embodies the company’s commitment to delivering exceptional customer service.

“Today’s customers want simplicity, and this new website delivers on that request,” Okpagu said. “We are empowering customers to take control of their lives, their businesses, assets, and their most cherished people.”

One of the key features of the website is its personalized insurance experience, which takes customers through a short journey to help them identify the best insurance plan for their needs.

Whether customers are looking for coverage for their home, car, business, or loved ones, the website provides tailored recommendations to ensure they find the right insurance solution quickly and easily.

With its user-friendly interface and innovative features, the new website from Heirs Insurance Group sets a new standard for the insurance industry, making it easier than ever for customers to protect what matters most to them.

Insurance

AIICO Insurance Boosts Infrastructure Development with 5% Stake in InfraCredit

Published

4 months ago

December 21, 2023

Investors King

AIICO Insurance Plc has acquired a five percent shareholding in Infrastructure Credit Guarantee Company Limited (InfraCredit).

This strategic investment positions AIICO as the second domestic institutional investor admitted by the infrastructure credit guarantee institution, following Leadway Assurance Plc.

The infusion of capital from AIICO is set to elevate InfraCredit’s paid-in capital base to an impressive $175.14 million (approximately NGN 148.55 billion), translating into an aggregate guarantee issuing capacity of up to NGN 742.77 billion (about USD 875.7 million).

This equity injection will become part of InfraCredit’s core capital, enhancing its guarantee issuing capacity and contributing to the sustenance of its coveted ‘AAA’ credit rating.

InfraCredit, known for deploying innovative credit enhancement solutions, has been pivotal in mobilizing private sector financing for infrastructure projects across various sectors of the Nigerian economy.

AIICO’s investment underscores its commitment to bridging the infrastructure gap in the country, marking the evolution of a long-term partnership with InfraCredit.

Babatunde Fajemirokun, the Chief Executive Officer of AIICO Insurance, emphasized the company’s dedication to supporting infrastructure development.

He stated, “This investment is the evolution of what we at AIICO Insurance believe will be a long-term partnership with InfraCredit. Over the past two years, AIICO Insurance has invested in InfraCredit guaranteed bonds and participated in novel financing arrangements promoted by the company to bring infrastructure investment to areas that have been significantly underserved.”

The Chairman of the InfraCredit Board of Directors, Sanjeev Gupta, welcomed AIICO as a new shareholder and highlighted the importance of fostering a strong partnership between the public and private sectors.

Gupta said, “AIICO’s investment is in line with our vision of creating a strong partnership between the public and private sectors. This partnership aims to attract private sector capital for infrastructure financing sustainably.”

Chinua Azubike, the CEO of InfraCredit, expressed enthusiasm about AIICO’s admission as the second private domestic institutional investor.

Azubike stated, “The admission of AIICO Insurance, the second private domestic institutional investor in InfraCredit, reinforces the confidence in the sustainability of InfraCredit’s unique business model.”

The AIICO Insurance equity investment is expected to further strengthen InfraCredit’s core capital base, expand its guarantee capacity, and facilitate deeper market penetration.

This collaboration aims to advance sustainable finance for impactful infrastructure projects in Nigeria, aligning with the nation’s broader goals for economic growth and development.

Insurance

Resilience Amid Challenges: Nigerian Insurance Giants Report 165% Surge in Profits

Published

5 months ago

November 22, 2023

Investors King

Against a backdrop of a challenging business environment and meager insurance penetration in Nigeria, thirteen leading insurance companies have displayed resilience by declaring a collective profit before tax (PBT) of N57.1 billion in the first nine months of 2023.

This signifies a 165% increase compared to the N21.51 billion reported during the same period in 2022.

The standout performers among these insurers include AXA Mansard Insurance, Cornerstone Insurance, and AIICO Insurance, which collectively contributed significantly to the sector’s stellar performance.

AXA Mansard Insurance, particularly, recorded a remarkable 471% increase in profit before tax, reaching N15.1 billion in the nine months ending September 30, 2023.

Notably, AXA Mansard Insurance stands out as the sector leader, declaring an interim dividend of 6 kobo per N2 ordinary share, payable to shareholders on December 15, 2023, showcasing a commitment to rewarding investors.

The remarkable financial performance of these insurers has had a tangible impact on the NGX Insurance Index, reflecting a 68.44% Year-to-Date growth as of November 17.

Analysts attribute this positive trajectory to the sector’s resilience and profitability.

However, the sector grapples with impending recapitalization efforts and the need for regulatory reforms. The proposed Consolidated Insurance Bill awaits presidential assent, promising transformative changes for the industry.

Analysts believe these changes, coupled with increased budgetary allocations from the Federal Government, will strengthen the sector’s capacity to contribute significantly to the nation’s GDP and employment creation.

As the industry anticipates legislative support, stakeholders remain hopeful for a new era of growth and global best practices in the Nigerian insurance landscape.