Continental Re Gross Earnings up 7.4% to N16.15bn

Continental Reinsurance plc has recorded a gross earnings of N16.15 billion for the financial year 2014, as against N15.04 billion recorded in 2013, showing a 7.4 percent increase.

While explaining the company’s performance, Femi Oyetunji, group managing director, Continental Re, said in 2014, the company made strong strides in the execution of its five-year strategic growth plan to be the premier pan-African reinsurer.

Continental Re inaugurated its North African office in Tunisia and extended its footprint in Africa with the opening of a regional hub for Southern Africa in Gaborone, Botswana, he said. The company now operates from six locations across the continent namely Lagos, Douala, Nairobi, Abidjan, Tunis and Gaborone.

“Going forward, our focus will be to optimise returns from these capital investments, by consolidating our brand presence, enhancing our client services, securing strong growth in premiums, streamlining our underwriting practices, enhancing our operational efficiencies and strengthening our already formidable multi-national talent pool,” he said.

The firm’s underwriting profit fell by 18.5 percent to N1.37 billion in 2014 from N1.68 billion in 2013, while its claims expenses rose by 15.5 percent to N7.37 billion from N6.38 billion in the periods under review.

Continental Re’s investment and other income rose by 2.1 percent to N1.43 billion in 2014 from N1.40 billion in 2013. It also recorded a foreign exchange loss of N391 million in 2014 from a gain of N202 million in 2013.

According to its financial result, the firm’s profit before tax reduced by 28.7 percent to N1.59 billion in 2014 from N2.23 billion in 2013. Its profit after tax also reduced by 51.1 percent to N856 million in 2014, from N1.75 billion in 2013 due to additional back-duty taxes levied.

Further look into the financials shows that total assets rose by 8.0 percent to N28.21 billion in 2014 from N26.13 billion in 2013, while its investment portfolio grew by 3.1 percent to N15.64 billion from N15.17 billion in the periods under review.

The company’s reinsurance reserves rose by 9.2 percent to N10.78 billion in 2014, from N9.87 billion in 2013, while its shareholders’ fund rose by 3.4 percent to N14.78 billion from N14.29 billion in the periods under review.

Solvency margin improved to 106 percent in 2014 from 105 percent in 2013.

The company noted that during the year, attainment of growth targets and operational performance as initially envisioned were constrained by negative exchange rate movements of a number of African currencies against the naira and significant devaluation of the naira against the dollar late in the fourth quarter.

Concurrently, it noted that there was non-recurring weakening of certain key indices emanating from remediation of legacy business-process inefficiencies as part of alignment of these in line with overall objectives and the need to comply with industry standards, particularly enforcement of the ‘no premium no cover’ standard in debtors’ management.

However, the firm said overall financial condition of the company was preserved as evidenced by the growth in assets and shareholders’ funds and the improvement in the solvency margin.

“We continue to monitor enterprise-wide underwriting, operational, regulatory and other risks to ensure adequate mitigation thereof by way of controls and measures that are geared to minimising down-side impact on long-term performance,” Oyetunji said.

The increase in business volumes and escalation in the complexity of its transactions due to the geographical diversity of its operations had resulted in an enhanced focus on the areas of control, automation and compliance, he said, saying “the 2015 outlook is positive on the back of expected robust Gross Domestic Product growth of African economies anticipated to exceed 5 percent.”

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