GCR upgrades NEM Insurance coverage ranking to AA+(NG)

Score agency GCR Rankings has upgraded NEM Insurance coverage Plc’s nationwide scale monetary power ranking to AA+(NG) from AA(NG), with a steady outlook.

In accordance with a press release from the underwriter on Tuesday, the ranking agency hinged the improve on sustained strengthening in NEM Insurance coverage Plc’s aggressive place throughout the non-life insurance coverage phase, supported by a sound monetary profile that’s characterised by sturdy risk-adjusted capitalisation, satisfactory liquidity and good earnings capability.

The PidomNigeria stories that NEM is a number one insurer throughout the Nigerian non-life insurance coverage phase, accounting for an estimated market share of 10 per cent in 2024.

In 2024, NEM’s insurance coverage income grew 88.0 per cent to N98.0bn ($63.1m).

 Moreover, GCR Rankings mentioned the agency’s income base is effectively diversified, with 4 of the eight strains of enterprise every contributing over 10 per cent of insurance coverage income.

It added that the insurer is predicted to strengthen and keep its main place within the non-life insurance coverage house, whereas the deliberate growth to the life enterprise may additional assist enterprise diversification over the outlook horizon.

“NEM maintained a sound earnings profile over the assessment interval, supported by sustained development in insurance coverage income, worthwhile underwriting and robust funding revenue. On this respect, the web incurred loss ratio improved to twenty-eight.5 per cent (2023: 33.6 per cent), reflecting advantages of scale efficiencies, translating to a normalisation of the mixed ratio to 86.6 per cent in 2024 (2023: 100.5 per cent; 2022: 88.8 per cent) and compares favourably with friends,” GCR posited.

It famous that the funding yield remained robust at 18.9 per cent, supported by a excessive funding portfolio allocation to fixed-income securities amid the high-interest-rate surroundings.

GCR submitted that consequently, revenue after tax improved significantly by 125.8 per cent to N29.9bn ($19.3m), leading to a strong return on income of 43.1 per cent in 2024 (2023: 35.7 per cent).

“The insurer’s skill to take care of a powerful earnings profile whereas sustaining aggressive gross premium development and diversifying into longer-term strains that pose vital expense pressure represents a key ranking enter over the medium time period. Threat-adjusted capitalisation stays the key ranking power

“Moreover, NEM’s statutory solvency margin remained robust at 19.3x (31 December 2023: 8.8x), effectively above the regulatory minimal of 1x. Trying forward, we count on the GCR CAR to be sustained inside a 1.7x to 2.0x vary over the following 12-18 months, balancing the anticipated enterprise growth and good earnings retention,” mentioned the ranking company.

GCR Rankings said that the Steady Outlook displays its expectation that NEM will maintain its market place, supported by enterprise growth and diversification consistent with technique.

“We additionally count on risk-adjusted capitalisation and liquidity ratios to be maintained above 1.7x and 1.5x, respectively, over the following 12-18 months, whereas earnings strengths may average as a consequence of expense pressure from onboarding longer-term merchandise,” it posited.

On ranking triggers, the company submitted that an upward ranking motion may consequence from sustained earnings power that improves capitalisation and liquidity metrics to above 2x regardless of the deliberate enterprise growth, accompanied by strong capital administration methods.

The Managing Director of NEM Insurance coverage Plc, Andrew Ikekhua, mentioned the improve confirms the agency’s strategic underwriting course of and sustained profitability, stressing that the corporate would proceed to supply sturdy insurance coverage companies to policyholders consistent with its core values and imaginative and prescient, which is to be the supplier of selection for wholesome insurance coverage options.

The excellent efficiency of NEM Insurance coverage Plc has continued to achieve recognition, as Ikekhua was lately recognised among the many High 25 Chief Govt Officers in Nigeria. He was rated as certainly one of Nigeria’s excellent company leaders on the prestigious BusinessDay High 25 CEOs Awards held in Lagos.