Nigeria: IEI gets tripple B rating from Agusto
October 7, 2008 by ella
International Energy Insurance Plc (IEI) is an “insurer with satisfactory financial condition and adequate capacity to meet claim obligations,” said Agusto & Co in its 2008 Insurance Rating Report just released in Lagos.IEI earned a triple B (Bbb) rating from the rating agency for showing such strong financial standing, which means that the insurance company scored anything from 60 per cent to 69 per cent in the overall assessment of its financial condition.
Giving details of the performance ratios measured in the evaluation, Agusto & Co described IEI as an insurance company that has demonstrated a track record of strong profitability and sustained earnings, satisfactory investment, strong capital base, stable and experienced management. The rating agency noted IEI dominance and strategic positioning in the energy insurance market.
Further details of the rating report stated that IEI’s capitalisation is strong with a solvency margin of 469 per cent compared to a regulatory minimum of 15 per cent, which means that IEI has 31 times more cash than the industry average.
The report also stated that in the assessment period IEI posted a return on equity of 12 per cent, which was higher than the coupon rate of 9.5 per cent on the 12 month treasury bills.
The report added that the company is blessed with experienced and focused management, quality staff driving company’s good productivity and a retail customer base that has aided diversification of the company’s business portfolio.
The report stated that IEI’s staff productivity index, as measured by net earnings per staff, improved to N6.8 million as at December 2007 from N1.6 million in 2006, an excellent achievement compared to about N2.3 million achieved by some of its peers within the same period. Gross premium per employee stood at N18.9 million, higher than an average of N12.2 million achieved by some of some of its peers.
In the wake of the Insurance Rating Report 2008, looks poised for greater things. The company is implementing a growth strategy that is partly driven by diversification plan by which it has acquired interests in a number of subsidiaries and associates with different business focuses. IEI’s aim for these investments is to position itself to benefit from emerging opportunities in other market segments, while retaining its focus on energy insurance.
Some of IEI subsidiaries and associates include IEI Ghana Limited, IEI Assets Limited, IEI Anchor PFA, IEI Mortgage, Equity Life Insurance Company Limited and C&I Leasing.
IEI currently has shareholders’ funds of N11.5 billion, which is far in excess of the regulatory minimum requirements of N3 billion for general insurance business and one of the highest in the insurance industry.
Three years ago the management of IEI led by Mr. Jacob Erhabor, managing director and chief executive embarked on a strategic turnaround programme to reinvent the company. The rising financial profile of the company is seen by market watchers as the positive outcome of the reinvention programme.
IEI reported an after tax profit of N1.30 billion for the second quarter ended June 30, 2008, representing an improvement of 212.30 per cent from N414.95 million made in the same period of 2007. The second quarter net earnings surpassed the entire turnover of N1. 02 billion posted in the half year ended June 30, 2007.
The company’s unaudited half-year results released to the Nigerian Stock Exchange indicate excellent improvement on all key performance indicators. Gross premium income went up by 74.3 per cent to N1.778 billion in the review period compared with the preceding year’s total of N1.020 billion. The insurer generated a pre-tax profit of N1.52 billion for the period, which was 212.30 per cent higher than the pre-tax profit record in the corresponding period a year ago.
Growth in underwriting profit, assets and shareholders’ funds was relatively modest at 32.14 per cent, 23.39 per cent, and 8.33 per cent, respectively. The superb Q2 performance helped IEI to rocket its net profit margin to 72.8 per cent from 41 per cent in the corresponding quarter a year earlier. By such fantastic profit margin IEI easily rates as the most efficient insurance company in the Nigerian market with the hard-to-beat record of making a net profit of N72.8 from every N100 income generated.
The significant improvement in the second quarter follows an equally bullish performance in first quarter for the period ended March 31, 2008 during which the company grew its gross premium income by 217 per cent to N980.3 million from N309.3 million achieved in the corresponding period of 2007. Within the first quarter too the company lifted pre-tax profit by 220 per cent to N395.2 million, up from N123.6 million earned in the same period year earlier.
Similarly, total assets and shareholders’ funds went up 144 per cent and 88 per cent to N15.2 billion and N10.97 billion, respectively
