WAICA Re settled $30.5m claims to Nigeria, 8 others in 2020

Management of the West African Reinsurance Corporation (WAICA Re) says it has settled net claims of $30.5 million in its 2020 financial year, representing a 63 per cent increase from the $18.7 million recorded in 2019.

Speaking during the company’s 8th Annual General Meeting (AGM) held virtually, weekend, Group Chairman, Kofi Duffuor, said the claims were incurred across most of the nine countries it is operating from.

The nine countries include; Nigeria, Ghana, Liberia, Kenya, Sierra Leone, Tunisia, The Gambia, Zimbabwe and Côte d’Ivoire.

He added that facultative claims contributed 59 per cent of the total claims paid whilst treaty claims was 41 per cent, stressing that, the net incurred loss ratio increased to 39 per cent in 2020 compared to 31 per cent in 2019.

Underpinned by increase in business volumes and increased claims reserve, net claims incurred increased by 63 per cent to $30.5 million in 2020 from $18.7 million in 2019. Facultative claims contributed 59 per cent of total claims paid whilst treaty claims was 41 per cent. Consequently, the net incurred loss ratio increased to 39 per cent in 2020 compared to 31 per cent in 2019.

“Net commission expense rose to $23.5 million in 2020 from $17.6 million in 2019, representing 33% growth largely as a direct function of growth in earnings. The commission ratio also remained flat at 30% in line with both company trend and industry averages.

“Operating expenses decreased year on year by 4 per cent, given management efforts to reduce cost, hence, operating expenses fell to $17.1 million in 2020 from $18.2 million in 2019 even as expense ratio equally fell to 22% in 2020 from 31% in 2019.”

“While overall, combined ratio improved to 91% in 2020 having fallen from 93% in 2019,” he explained.

According to him, WAICA Re has continued to display a strong underwriting profitability as a result of sound underwriting and risk selection, noting that technical profit grew from $23.2 million in 2019 to $26.2 million in 2020, representing a 13% growth.

“Underwriting profit also grew from $5.0 million in 2019 to $8.8 million in 2020, a growth rate of 77%. Whilst Technical margin fell from 40% in 2019 to 33% in 2020, underwriting margin improved from 9% in 2019 to 11% in 2020,” he pointed out.

Stating that the reinsurance firm’s investment and other income witnessed an increase of 14% from $3.4 million in 2019 to $3.9 million in 2020 even though there was a general fall in interest rates especially in Anglophone West Africa, Duffuor added that, return on investment fell from 4% in 2019 to 3.7% in 2020.

“Management continues to review the investment portfolio to help improve the return on investment. “The above Profit and Loss analysis shows that, the major drivers of profit in 2020 were the growth in premium income, improved underwriting performance and a reduction in management expenses.

“Improved premium collection enabled the group to increase cash and investment assets by 29% to $114.9 million in 2020 from $$88.9 million in 2019.

“The group’s cash and investment assets accounts for 62.5% of total balance sheet size. Liquid assets increased to $105.2 in 2020 from $79.3 million in 2019 giving the group a strong liquidity metrics compared to claims and technical liabilities,” he disclosed.

Duffuor further announced to the shareholders that the Board of Directors recommended a dividend of 0.0814 per share amounting to $4,000,000 (2019; $3,000,000).

“This dividend will be paid to shareholders whose names appear in the register of the Corporation as at the date of the AGM,” Duffuor assured.

According to Duffuor, the Board recommended the issuing of additional capital of 10 million shares in 2020 by a rights issue at a price to be determined by its financial advisors.

“There was also the intention to invite strategic investors to take up shares in the Corporation. These decisions were suspended due to the COVID-19 pandemic and the uncertainties that surrounded it. “This year we would like to carry out the exercise as it will strategically position the corporation to underwrite larger businesses especially in the oil and gas sector among others, expansion of our ICT and to ensure a strong balance sheet that will make us more competitive in the reinsurance market,” he concluded.