By Omoh Gabriel, Business Editor
Continental Reinsurance in the financial year 2003 further improved its performance and market share in all of its financial indicators which ratios improved well above that of 2002. The year 2003 operating results saw Continental Reinsurance’s financial indicators moved up the financial ladder as a result of better performance and increased yields from every aspect of its operations. The Re Insurance grew its asset base by as much as 54.7 per cent to N1.513 billion. Continental Reinsurance‚Äôs asset expansion resulted mainly from its cash and bank balances which expanded by 408 per cent over the previous year‚Äôs figure. Investment in life and non life insurance grew by 59 per cent to N861.77 million from N541.77 million in 2002. Continental Re’s debtors also increased by 44.7 per cent. Prepayment and other debit balances grew by 38.13 per cent.
However, deposit remained at the 2002 level while fixed assets grew by 14.4 per cent. As a result of the tremendous growth in all line of asset items of the insurance company, it was able to grow its income above the 2002 level. Investments in long term instrument experienced increases as life insurance stood at N95.1 million. During the period under review short term investment in non life insurance stood at N766.66 million in 2003 far above that of life. The increase in the insurance’s asset base empowered it to grow its business in 2003. Continental Re’s operations were boosted by the increase in non-life revenue income which rose by 120 per cent. Life revenue generated N2.12 million in 2003 as against the N1.393 million it made out of it in 2002.
This represents a 52.4 per cent increase. With an almost all round improvement in revenue lines, Continental Re grew its net income to N199.7 million in 2003. The Re Insurance’s operation were however constrained by the increase in its operating expenses from N17.25 million in 2002 to N32.45 million in 2003. The Re Insurance company also saw investment and other income rising to N114.322 million from N76.842 million in 2002.
Earnings
Continental Reinsurance has in the last five years improved on its earnings per share. While the average share of the company earned 14 kobo in 1999, it dropped to 4 kobo in 2000 and rose to 26 kobo in 2001 and further to 28 kobo in 2002. In 2003 the average share earned 39 kobo.
Continental RE’s asset per share in 1999 was 157 kobo. It grew to 172 kobo in 2000, 137 kobo in 2001, 168 kobo in 2002 and 205 kobo in 2003. The company in the last five years has only failed once to pay dividend to its share holders. In 1999 it paid a dividend of 5 kobo per ordinary share of 50 kobo but in 2000 it could not pay any dividend. It resumed the payment of dividend to shareholders in 2001 with 5 kobo. This however was improved upon in 2002 as it paid out 7.5 kobo as dividend. In the 2003 financial year a dividend of 9 kobo was declared for shareholders.
Profit margin inched up
The Reinsurance’s profit before tax rose from N110 million in 2002 to N199.7 million in 2003. This is about 81 per cent increase in profitability. This greatly improved result is attributable to a remarkable non life underwriting profit of N115.7 million .
The company‚Äôs operating expenses increased by 115 per cent from N84 million in 2002 to N183 million in 2003. The increase in overhead cost contrained funds to net revenue and cut down on profit. However, provision for liabilities and charges increased at higher figure than the previous year‚Äôs. Provision for insurance funds increased in line with the general increase in insurance policy. Provision for the year stood at N467 million as against the N329.2 million made in 2002. The increase took toll on revenue and profit. The increase in revenue line and profit level resulted in improvement in the rates of return in the year. Return on average assets increased from 11.3 per cent in 2002 to 13.2 per cent in 2003. Return on equity also increased from 21.9 per cent in 2002 to 24.1 per cent in 2003. These ratios are lower than industry average. The increase in return on equity was as a result of the growth in pre-profit which responded faster than the growth in shareholders’ fund.
Revenue base
The Insurance‚Äôs revenue base during the year increased along line the increases in revenue lines. Gross premium income, as a result, rose, thus pushing up the Reinsurance to an earning bracket of N1.006 billion in 2003 from N601 million in 2002. Non-life gross premium income increased by 69 per cent to N936 million in 2003 from N555 million in 2002. Life gross premium income was N69 million in 2003, growing by 50 per cent from N46 million in 2002. With that, the Reinsurance maintained its growing position in the industry unlike the trend in most insurance company in the industry where operators fight hard to sustain previous years’ growth rates.
Loss Paid
Continental Reinsurance during the year paid out a total claim of N324.563 million in 2003 as against the N210.2 million it paid out as claims in 2002. This represent 54.4 per cent increase in claims made against it. The company paid a total of N145.3 million as fire, N51.1 million as accident claims, N87.75 million as claims brought from marine sector and N40.3 million as liability.
The company had as reserve for outstanding claims at the beginning of the year in the sum of N73.57 million as against the 63.728 million of the previous year. Further in 2003 the company had N286.2 million as claims incurred. This when compared to the N220.0 million in 2002 shows an increase of 30 per cent.
During the period under review, Continental Reinsurance recapitalised and met the new minimum base capital for reinsurance of N350 million.The share capital of the company rose from N300.1 million in 2002 to N403.66 million in 2003. Deposit for shares stood at N174.8 million, while reserve for bonus issues also stood at N100.9 million. Other reserves had a record of N10.4 million with contingency reserve recording N137.1 million. This brings the equity base of the company to N829.648 million.
Management
Continental Reinsurance has nine members on its board of directors. Eight of the board members including the chairman, Eng. S A Laguda are non-executive, while the managing director, Mr. A. Adejumo is the executive member of the board. The managing director is supported by one general manager, two assistant general managers and a senior manager. The management team is made up of tested insurers. The management of the company has been fairly stable, qualified and experienced.
Outlook
Continental Reinsurance has a growing market share as shown by its asset expansion which is an indication of growth in all indices. The insurance company has emerged as a strong and viable financial institution imbued with the right people and adequate capacity to support its drive for improved sustainable superior performance. In line with its expansion policies, the company is to open its doors to more investors through listing on the floor of the Nigerian Stock Exchange.
Also the company is exploring the door of investment opened to it by Zimbabwe Re. This when realised will further boost the operations of the company and future streams of benefits.
