Despite unfavorable economic and political environment, coupled with increased competition and softening conditions in the reinsurance industry, Continental Reinsurance is proud to maintain its position in the market and report a profitable performance in year 2017. Our firm commitment to grow our company sustainably through volume growth, improved operational efficiencies and development of critical skills helped us in this feat.
Year 2017 marked Continental Reinsurance Plc’s 30th anniversary of doing business in Africa. In line with its core values, the Company continues to consolidate its role as a trusted partner in the African insurance industry through responsive service delivery, diverse product offerings, and capacity building across local markets underpinned by the security and strength of its pan-African operations. The celebration was not without recognition of our valued past and present shareholders, directors and employees who through their foresight, courage and selflessness steer the company to ensure its sustainability. We have become a respected and well recognised brand in Africa due to the solid foundation laid by them.
As Competition continues to grow stiffer with the entrance of new players in a number of our markets, our footprint and our permanent view on Africa propelled us to continue waxing stronger. In 2017, we enabled our Tunis office to write retakaful business through its retakaful window to consolidate our presence in the region and also sought accreditation as a local insurer in line with local content requirement in the Tanzanian market which was granted in year 2018. These moves are to significantly improve our revenue and assist toward realizing our Project Alpha 2020 strategy of consolidating our brand presence and enhance our client services to guarantee sustainable growth and strengthen our already formidable multi-national talent pool to the benefit of our continent at large.
The realization of the likelihood of shocks in our principal market, and vulnerability to portfolio concentration, made us commit to diversification as a core element of our strategy. We continue to see stability and strong traction in specific locations across our network and our pan-African footprint allows us ample room to counterbalance local volatility and hedge downside risks in our investments portfolio.
Knowledge sharing and thought leadership are key aspects where we develop the market and add value to our partners. In line with this, we rolled out a series of training programmes that focused on imparting re/insurance skills to our clients and partners; we are happy that the programmes contribute to delivery of sustainable business practices and impacting positively on human capital requirement within the industry and the continent at large.
Engaging stakeholders has always been one of the pillars of our strategy. Our 4th CEO Summit was held in Dakar, Senegal. The theme of the summit was ‘Prepare for the future: building our insurance legacy’. The participants considered that the growth prospects presented itself in the playing field and addressed the ongoing changes and challenges in the pursuit of achieving sustainable growth. The challenges identified at the summit include under insurance, inappropriate pricing, moral hazard, volatility of portfolios and currency devaluation across Africa. The participants agreed to call for collaboration within countries and across borders, so as to have insurance and reinsurance companies that have strong balance sheets and are better placed to compete in the global arena.
Continental Reinsurance Plc’s performance for the year 2017 reflects the outcome of targeted underwriting actions and increased underwriting discipline. Gross Premium Income grew by 32%, from NGN22.4 billion in 2016 to NGN29.6 billion in 2017 and the underwriting profit grew by 213%, from NGN414 million in 2016 to NGN1.30 billion in 2017. The company’s Claims expense grew by 22%, from NGN11.7 billion in 2016 to NGN14.4 billion in 2017.
Despite the excellent underwriting performance recorded, there is a decline of 23% in profit before tax from NGN4.65 billion in 2016 to NGN3.57 billion in 2017 and a decline in profit after tax by 21% from NGN3.12 billion in 2016 to NGN2.47 billion in 2017. This is attributed to a drop in Currency Exchange gain from NGN 4.1 billion in 2016 to NGN1.1 billion in 2017 as a result of the relative stability of the Naira which is the group reporting currency. Investment and other income recorded a growth of 37% year-on-year.
Total assets grew by 7% year-on-year from NGN40.25 billion in 2016 to NGN43.09 billion in 2017 while Shareholders’ fund was NGN21.53 billion in 2017, up by 9% from NGN19.73 billion in 2016.
Investment portfolio grew by 2.83% to NGN23.97 billion in 2017 from NGN 23.31 billion in 2016 while Reinsurance reserves increased by 31% from NGN13.7 billion in 2016 to NGN18 billion in 2017.
A well-balanced pan-African footprint has been sustaining our growth momentum, this reinforces our confidence in our ability to continue to record and achieve a year on year growth in premium income and profit.
The growth prospects of 3.2% in 2018 for sub Saharan Africa’s economy envisaged by the world bank willpropel upward spending on major infrastructure investment projects and this will have positive impact on insurance activities. Our positioning across the continent has given us the opportunity to take the advantage available in the market place.
We shall continue to make use of advanced risk management tools, prudent underwriting practices and the development of critical skills to ensure sustainability and profitability over the longer term.