Royal Exchange Plc has projected a rise in its Profit after Tax (PAT) to N500.83 million for the first quarter of 2021 (Q1, 2021), indicating a 244% increase from the figures recorded in Q3 2020.
This is according to the latest earnings forecast of the firm, signed by the Chief Financial Officer of the firm, Olalekan Jayeola, and sent to the Nigerian Stock Exchange market.
Key highlights of the earnings forecast of Q1 2021
- Pre-tax profit is projected at N736.5million, +244% Q-o-Q.
- Gross Written Premium is expected to hit N4.75 billion, +95% Q-o-Q.
- Net premium is projected to decline to N1.7 billion, -19.1% Q-o-Q.
- Fees and commission income is projected to decline to N141.2 million, -25% Q-o-Q.
- Investment income is projected to increase to N475.51 million, +3.3% Q-o-Q.
- Total underwriting expenses is projected to decline to N1.3 billion, -40.5% Q-o-Q.
- Total underwriting profit is projected to increase to N567.4 million, +299.4% Q-o-Q.
- Total operating expenses is projected to decline to N494.1 million, -5.7% Q-o-Q.
Key assumptions
In preparing the forecast, some assumptions were made including;
- The premium income budget for the year is zero based.
- Reinsurance is projected at 27% of Gross Written Premium.
- Fees and Commission income was forecasted at 11% of reinsurance expense.
- Claims expense of N514Million is estimated not to exceed 30% of Net Premium Income.
- Underwriting expenses of N685Million is forecasted not to exceed 40% of Net Premium Income.
- Management expenses of N479million are estimated not to exceed 30% of Net Premium Income.
- The Inflation rate was projected at 14% as the worst case scenario.
- The exchange rate of N385 to a dollar was assumed.
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