Continental Re’s profit climbs amid rising expenses

Continental Reinsurance plc first quarter (Q1) net income climbed 37.98 percent amid rising operating expenses, as the Nigerian company continues to seek inorganic growth through aggressive expansion across Africa.

The impressive result means the company has overcome the low premium income environment.

For the first three months through March 2015, Continental Re’s net income increased by 37.98 percent to N837.29 million from N606.80 million the same period of the corresponding year (Q1) 2014.

Continental Re achieved the double digit growth in net income amid a 30.67 percent increase in insurance benefit and underwriting expenses to N3.96 billion, and a 10.24 percent rise in operating expenses to N109.80 million.

While Nigeria is a low premium environment, Consolidated Re was efficient in its underwriting capacity as insurance premium revenue increased by 18.47 percent to N4.82 billion in 2015, compared with N4.0 billion the previous year.

Net Insurance Premium Income were up by 20.54 percent to N4.40 billion in 2015 from N3.65 billion in 2013.

Continental Re is expanding operations across Africa with a view to consolidating its share of the market.

The reinsurance company plans to open a construction property and engineering risk services unit in South Africa. This strategic plan is boost specialist skills in other areas, including actuaries and information technology, to advise and support underwriters.

The company’s earnings per share (EPS) rose by 33.33 percent to 8k in 2015 as against 6k in 2014.

Return on equity (ROE) moved to 5.26 percent in 2015 as against 4.17 percent in 2014, while the return on average assets (ROA) jumped to 2.71 percent in 2015, compared with 2.15 percent in 2014.

The improved returns mean the company is using the resources of the owners in generating higher profit.

Continental Re’s total assets increased by 12.62 percent to N30.83 billion in 2015 from N28.20 billion in 2014, while total shareholders’ fund jumped by 9.71 percent to N16.21 billion in 2015 as against N14.77 billion in 2014.

The company’s shares rose 1.02 percent to N0.99 by the close of market in Lagos on Wednesday, the biggest advance in two months. It market capitalisation was N10.27 billion while total shares outstanding was 10.37 billion.