Cornerstone Insurance Plc has said that it benefited immensely from the regulatory changes introduced by the National Insurance Commission(NAICOM) in terms of Group Life Insurance pricing.
The company, said it leveraged on the changes to successfully grow its life insurance portfolio by 48 percent in the year ended December 31st, 2018.
Cornerstone, also said its introduction of a new product targeted at the retail segment gave its performance during the period under review a big boost.
The company’s Chairman, Segun Adebanji, who disclosed this at the 27th Annual General Meeting of the company held in Lagos, said despite continued challenges in the business environment, Cornerstone Insurance has continued to record growth all rounds.
“Your company continues to record growth in revenue despite challenging market conditions. Gross Premium Written for the year under review was N11.5 billion, an increase of 25 percent from the previous year.
“The largest contributor to this was our Group Life portfolio which contributed N2.01 billion amounting to 17 percent of total gross written premium,” he added.
He said individual life insurance portfolio of the company grew by 370 per cent to N621 million, as against N132million recorded the previous year.
According to him, in the general business segment, the engineering, oil and gas product segment continued to dominate the general business portfolio with a combined contribution of 57 per cent of general business premiums (N4.13 billion), giving credence to the emergence of Cornerstone Insurance as a leading special risks underwriter. He said the company through its management prudence, reduced claims figure coming its way.
“A review of our overly prudent claims reserving methodology during the year saw our gross claims incurred for the year drop to N4.53 billion from N7.74 billion in the previous year, aligning more with the industry average.
“In accordance with the provisions of IFRS 11, the completion of our head office building, which had been represented as a non-earning asset in our accounts, unlocked some value and contributed N2.31 billion to the group,” he added.
He said this notwithstanding, the company did not relent on the cost control measures put in place in the previous year, adding that this efforts reduced operating and personnel expenses by 13 per cent, from N3.09 billion in 2017, to N2.69 billion in 2018.
Adebanji, noted that the cumulative effects of the strategic focus on the company’s key growth drivers resulted in a return to profitability in 2018, adding that profit before tax for the year 2018 stood at N2.66 billion after a period of losses.
On the company’s plans to comply with the regulator’s latest directive on recapitalisation, Adebanji said “NAICOM has in a circular dated 20th May, 2019, taken the decision to increase the minimum paid-up share capital of insurance and reinsurance companies.
“As a composite company, this represents an increase of 260 per cent for Cornerstone Insurance and for our General Insurance subsidiary, FIN Insurance Company Limited, it represents a 300 per cent increase,” he added.
He said in line with NAICOM’s mandate, the company’s board had met to consider its strategic options and has put plans in place to ensure that the firm continues to participate fully and actively in the Industry after the June 2020 deadline.
He sought and got shareholders’ approval for the firm’s authorised share capital to be increased from N7.5 billion, divided into 15 billion ordinary shares of 50 Kobo each to N20 billion, divided into 40 billion ordinary shares of 50 kobo, by the creation of additional 25 billion ordinary shares of 50 Kobo each, and such new shares ranking pari passu in all respects with the existing in the share capital of the company.
Commenting on the financial result of the company for the year under review, the Coordinator, Independent Shareholders Association of Nigeria (ISAN) Sir. Sunny Nwosu, lauded the company for the outstanding performance, whilst appealing to the board to give priority to minority shareholders in the course of the recapitalisation.