AXA MANSARD QUICK GLANCE TRAP

A quick glance at the figures released by AXA Mansard Insurance PLC of Nigeria recently could lead one into a trap: Concluding by saying Thank God for subsidiaries.
It will be wrong. Very wrong but could be an inevitable conclusion on discovering that while AXA Mansard the company settled for only about N3.62 gain on N100 total income in 2015, the group closed with more than twice that figure: N8.93.
Of course, both figures represented drops on 2014's N10 for the group and N5.82 for the company. By implication thank God for subsidiaries was also applicable in 2014.
Now here is the source of the trap. The company had nothing like gain from fair value on investment property in both years while the group reported N892.1m gain here in 2015 though down 41% on the N1513.3m recorded in 2014.
Apparently, this tilted the scale considerably although equally important was the higher 12.7% increase in group gross premium income to N16891.2m from N14889.1m compared to the company's 5.87% rise to N15616.6m from  N14751.4m.
Also helpful was the group 39.2% increase in investment income as against only 16.1% to N1840.6m for the company.
Where it actually mattered most, that is as a reflection of management quality, the company did far better in cost management. This, of course, does reflect adequately in the bottom line figures.
In terms of personnel cost, while that of the group rose by 12.8% to N1630.1m from N1445m, there was a 2.72% drop for the company from N1259m to N1224.7m.
Then although other operating expenses of the group increased by only 0.23% to N2080.6m, again drop to the tune of 4.07% was reported by the company to N1882m.
The same thing occurred in underwriting expenses and , in marketing and administration costs without drops being recorded.
Group increase in net underwriting expenses came to 25.5% from N6390.1m to N7904.1m while the company's rose by 14% to N6976.9m from N6119.2m.
The same way, group marketing and administration costs closed 40.4% up at N1433.2m from N1021.1m while the company's figure was N1208.9m, up 33.2% on N967.3m previously.
In the end, instead of saying thank God for subsidiaries, it will be better to say thank God for fair value increase in investment property.
SO:
* Of course, AXA Mansard's drop in profit margin needs to be checked in 2016.
* That can not be done easily if cost management quality does not percolate and spread throughout the group.

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