OPERATING ENVIRONMENT
We all remember that 2022 was a pre-election year in our country and it came with its challenges. There were diverse uncertainties ranging from insecurity to political instability. Political activities pervaded the national space. There were many events like party primaries and campaigns for Presidential and Gubernatorial elections among others. The Nigerian currency re-design embarked upon by the Federal Government, its attendant cash scarcity, internet banking difficulties coupled with occasional fuel scarcity and price increase as well as high inflation rate with its effect on the purchasing power of the populace were some of the challenges in the year under review. The impact of the volatility of the Foreign Exchange Market and the attendant rise in the cost of inputs for the manufacturing sector and the service industry contributed to operating results in our industry.
GLOBAL ECONOMIC OUTLOOK
From a modest Gross Domestic Product growth of 5.9% attained by the world economy in 2021, the International Monetary Fund (IMF) in their World Economic Outlook projected 2022's growth to slow to 3.2%, the weakest growth profile since 2001, apart from the era of the global financial crisis and the COVID-19 disruption. Many factors were responsible for this, including the contraction in global output, with downturns in China and Russia, a spike in global inflation which was higher than expected, and the negative spillovers from the war in Ukraine. The war resulted to increase in food and fuel prices, with low-income countries being the hardest hit. The Global growth however slowed down to 3.2% as projected. Some developments at the international front that impacted on national economies and business operations globally include foreign trade practices between major economic powers including the United States of America and China. The activities of non-state actors on the international scene like the Organisation of Petroleum Exporting Countries (OPEC) affected the price of crude oil, the main sustenance of Nigeria Economy. At the beginning of 2022, the price of crude oil was about $78 per barrel for the global benchmark, Brent crude, which rose to about $85 per barrel at the end of 2022 according to statistics from the Energy Information Administration (EIA). 2022 was a year of relative stability and modest improvement in the price of the commodity at an average price of $100 per barrel when compared with the 2021 average of $70 and $42 of the year 2020 due to the impact of COVID- 19. Although Nigeria's economy experienced a gradual recovery in 2022, driven by factors such as improved oil prices and output which grew oil reserves from N10.39 trillion in Quarter 4 2021 to N10.96 trillion in Quarter 4 2022, the Gross Domestic Product (GDP) recorded a marginal decrease from 3.40% in 2021 to 3.10% at the end of 2022 as reported by Nigerian Bureau of Statistics (NBS). Government spending on infrastructure increased by approximately 15% (year on year) in 2022 to N15.2 trillion from N13.2 trillion in 2021 in a bid to stimulate growth and provide much-needed infrastructures.
THE FOREIGN EXCHANGE MARKET
The Nigerian Economy being largely dependent on foreign inputs continued to be impacted by the volatile exchange rates of the Nigerian Naira (NGN) to other major currencies. The official exchange rate of the Dollar to Naira stood at N448.55/$ as against N416.50/$ in the corresponding year. However, there was a wide disparity with that of the unofficial or parallel market where huge funds sourced by millions of small-scale operators resulted in an alltime high rate above N700/$. The Monetary Policy Rate was 16.5% in 2022 against 12% in 2021, while the inflation rate was 21.34% in 2022 against 17% in 2021.
THE NIGERIA INSURANCE INDUSTRY
The Industry remains resilient with various initiatives by the Industry's regulators and operators to improve product penetration, service delivery and ultimately boost Gross Premium Income using technology, Bank assurance and promotion. At the tail end of the year 2022, the regulator released two guidelines; one on minimum premium rates for motor insurance to curb underpricing and enhance third party liability coverage. The second was on tenure for executives of insurance and reinsurance companies. There is continuing engagement between the leadership of the industry and the regulator with the overall interest of the industry and consumers in mind.
RESULT FOR THE YEAR
I am happy to report that we were able to record some improvements in all the key performance indicators in spite of the unfavourable economic realities in the year under review. Gross Premium written increased from N4,677,009,000 in 2021 to N4,929,908,000 in 2022 with an improvement of 5.41%. The Gross Premium Earned increased from N4,646,308,000 in 2021 to N4,966,565,000 in 2022 with a positive variance of 6.89%. Profit Before Tax (PBT) was an improvement of 19.58% from N447,542,000 in 2021 to N535,165,000 in 2022. After Tax Profit (ATP) was N377,370,000 in 2021 compared with N442,479.000 achieved in 2022 - a positive variance of 17.25%. Nevertheless, the Investment Income rose significantly from N161,312,000 in 2021 to N567,130,000 in 2022 with a positive variance of 251.6%. Total Assets increased by 3.57% from N7,176,602,000 in 2021 to N7,433,024,000 in 2022. Similarly, Shareholders' Fund increased from N5,405,871,000 in 2021 to N5,835,862,000 in 2022 with a positive variance of 7.95%.
FUTURE OUTLOOK
Technology keeps advancing both in the corporate world and personal life. The use of technology across all sectors significantly increased during the lock-down as a result of the COVID-19 pandemic and the re-tooling by organisations will improve processes and ultimately impact on results in the long run. Our company is making some progress in this direction and the impact will be reflected in our future performance.
ACKNOWLEDGEMENTS
Without doubt, I have enjoyed your support to date although returns to shareholders are still below expectations, but, there is a renewed hope with the present result and hopefully, we are at the end of the tunnel to see the beaming light soon. I want to use this opportunity to thank my colleagues on the Board, the entire Management and Staff of our Company, our intermediaries - Insurance Brokers and Agents, Actuaries, Loss Adjusters, Auditors and other service providers, as well as our numerous clients for all their support during the year. Our gratitude and thanks also goes to our esteemed regulators, The National Insurance Commission (NAICOM) for their co-operation over the years. I want to assure the shareholders that things will surely get better soon. Thank you all!
