Regency Alliance Plc is paying out more money in claims than it is receiving in premiums, as the insurer continues to spend unsustainably.
For the first six months through June 2025, Regency Alliance profit after tax (PAT) dipped by 67.65 percent to N240.19 million from N740.45 million as at June 2024.
The drop in profit was driven by a 209.56 percent surge in incurred claims expenses to N3.56 billion in the period under review from N1.15 billion the previous year, which wiped out all the gains from an uptick in revenue.
Inflationary pressures affect every industry and insurance is not immune from the carnage.
For instance, housing and labor cost increases have resulted in higher claims payouts for property and casualty insurance.
The rising cost of construction materials and labor has led to higher repair and replacement costs for damaged property, forcing insurers to raise premiums to cover these increased costs. And such an increment forces policyholders or customers to cut down on taking up insurance.
Ring total costs bloat the combined ratio and undermine profit margins to the detriments of shareholders who will be getting low returns.
Regency Alliance’s revenue was up 58.44 percent to N5.72 billion in the period under review from N3.61 billion the previous year.
The insurer realised N837.98 million from investment income, which is 13.20 percent higher than 2024’s 740.28 million.
Regency Alliance attributed its financial stability to its robust asset and liability management framework, which helped manage financial risks associated with interest rates, foreign currency, equity prices, and credit risks.
“The Group is exposed to a range of financial risks through its financial assets, financial liabilities, reinsurance assets, and insurance liabilities. Asset and Liability management attempts to address financial risks the group is exposed to, which include interest rate risks, foreign currency risks, equity price risks, and credit risks.
“The major financial risk is that in the long term, its investment proceeds are not sufficient to fund the obligations arising from its insurance and investment contracts. ALM ensures that specific assets of the group are allocated to cover reinsurance and liabilities of the Group,” the firm stated.
