“The company is now poised to take its rightful place in the non-banking financial services sector. We are sticking to what we know best and we are creating a high trust institution that will deliver services at lower cost,” said CEO Douglas Hoto.
At an analysts briefing held in the capital this week, Hoto was confident Afre would give its competitors a run for their money. Net premiums after providing retrocessions and accounting for the unearned premium reserve came in at US$67 million, 42% ahead of prior year income of US$47 million, whilst other income, driven mostly by revaluation gains investment properties accounted for US$21,64 million versus US$18,02million in 2010.
Total revenue reached US$88,68 million, 36% on last year’s US$65,22 million while strong cost management constrained total costs to a 15% growth to US$68,66 million from US$59,91 million in the previous year, leaving a net profit before tax of US$19,91 million, after accounting for a loss of US$112 000 from associates.
The group managed to steer its cost-to-income ratio to 77% in 2011 against 85% in 2010 as its claims ratio also came down by 4% to 57% from 61%. Hoto said because the group took segregation of policyholder funds from the shareholder funds seriously, the company appropriated US$15,79 million to the policy holders funds, whilst minority interests were allocated a profit of US$8 million, with the shareholder account bearing a loss of US$6,87 million.
The policy holder funds grew from US$51,08 million in 2010 to US$66,87 million, whilst the loss on the policy holder account was due mainly to a re-classification of properties that were previously accounted for as investment properties to property plant and equipment, resulting in a re-statement of the prior year financial statements in accordance with accounting best practices (IAS 40).
Management is confident going forward,buoyed by re-capitalisation plans.
“We believe that we should ask for money that we need to support business growth and we think that figure will be around US$10 million. Should we require more we may perhaps ask our shareholders for a bit more”, he said, adding that the company would deliver positive returns for shareholders in 2012.
Hoto also gave analysts a brief trading update saying gross premium revenues of US$22,6 million for the quarter ending March 31 2012 were 2% above prior year, whilst pre-tax profit was now at US$6,2 million and 5% against their budgets for 2012. He expressed confidence that gross revenue for 2012 would surpass US$90 million.