Shareholders of Linkage Assurance Plc will have to wait a little longer to earn dividend from their investment. This is as a result of the company’s high cost of doing business and lacklustre earnings from investment, which combined to whittle down profitability. This is despite the company announcing a 1.9 percent increase in gross profit in 2016.
Linkage Assurance said its earnings from investment activities declined by N959.77 million, which it attributed to poor performance of Nigeria’s capital market.
“The 2015 dividend income from Stanbic IBTC Pension Limited that was not received during the year led to a drop of 36% to N951million from N1.4billion in 2015”, the company had explained in a note to its account.
Linkage Assurance posted a profit before tax of N942.68 million for the business year ended December 31, 2016 compared to N925.28 million in the corresponding period of 2015. Total assets moved from N19.49 billion in 2015 to N20.33 billion within the yea under review.
Though Linkage Assurance was able to grow written premium 6.4 percent from N3.84 billion to N4.03 billion in 2016, profit before tax grew marginally by 1.88 percent with the bulk of its revenues going into management expenses with rose from N929 million to N1.08 billion representing a 16 percent rise within the 12 months of 2016. Managers of the composite insurance company promised to consolidate on-going initiatives to improve its operational efficiency as to reduce the cost of doing business, improve business processes, eliminate wastages and achieve higher margins in core businesses.
Nigeria currently has 54 insurance and reinsurance companies which operate in an environment that has failed to appreciate the benefits of insurance policies.
Nigerian insurers are said to have struggled to keep pace with an environment that has been hostile to investment while administrative prudence remains a major challenge for the industry. Insurance density which measures Gross Penetration of Insurance as a proportion of population is $8.3 compared to Kenya’s $36.4 and South Africa’s $970.8.
A 2016 report by rating agency Augusto & Co. indicates that “the financial liquidity of the insurance industry as evidenced in underwriting business and individual risks gross premium income (GPI) of N356 billion generated by the sector in 2016, reflecting a 10 percent growth over 2015.”
“Having almost come out of the “woods”, going forward, we will ensure that we pay dividend every year to our shareholders regardless of the changes in the business environment,” Linkage Assurance had assured.
Fire, Oil and Gas, Accident and Marine related business continued to dominate the lines of business of the company in 2016.