SIC Faces Stiff Competition

Since the removal of SIC Insurance Company’s monopoly over government’s insurance business, competition in the industry has intensified, as more companies are entering the market.

Over the years, Enterprise Insurance has captured a large share of the market.

SIC Insurance recorded a net premium of GHS54.2 million, representing an increase of 20 percent. This was due to a higher absolute change of GHS16.6 million in the gross premium as against GHS7.5 million for re-insurance cost, a nine-month synopsis on the company’s performance for this year by Frontline Capital Advisors has revealed.

SIC’s underwriting profit plummeted to GHS 2,179,113 on the back of increased claims and management expenses. Claims incurred also rose by a whopping 66 percent to GHS 20,702,616 while profit-before tax (PBT) fell by a significant 107 percent. Profit-after-tax (PAT) also dropped by a whopping 110 percent to close the period at a loss of GHS838,329.

“The unimpressive bottom line is largely attributable to the introduction of finance cost and bad debt of GHS1,381,410 and GHS7,994,983 respectively. SIC reported a 40.6 percent decline in working capital, while total assets dipped 5 percent to GHS140, 168,415. Shareholder funds also shrunk 5.9 percent to GHS81,879,802.”

The analysis further notes: “We do not expect the company to be significantly profitable at full year 2012 in view of the nine-month synopsis. We expect a marginal profit or loss under the present circumstance. We however expect the company to recover considerably in 2013 given that its African expansion and product innovation will be realised. The margins may also improve in the absence of huge bad debts. We expect revenues to grow by 14.4 percent to GHS 93.48million and profit-after-tax margin to decrease significantly from 7.6 percent in financial year 2011 to 0.6 percent in financial year 2012.

It would be recalled that on November 27, 2012, insurance mangers and staff of SIC Insurance Company commenced a nationwide sit-down strike to protest delays in payment of arrears and failure to fulfil other terms of agreement.

SIC Insurance is in the process of launching an e-insurance product, the first of its kind in the insurance industry. The process will involve the use of internet to process clients’ request online.

Meanwhile, its planned expansion into Sierra Leone and Liberia is yet to see the light of day and therefore remains a priority in 2013.

“With increasing intensity in competition, price wars and other gaming techniques, the company has had to rely partly on its real estate and financial services units to maintain a balanced footing in the market and industry. High claims and bad debts have done their worst in adversely affecting the bottom line of the company in 2012 as the ensuing synopsis reveals,” the report emphasised.

Founded in 1955 and headquartered in Accra, Ghana, SIC Insurance Company Limited provides various life and non-life insurance products and services in Ghana. Its insurance product portfolio includes accident, aviation, customs bond, energy, engineering, fire, general bonds, marine, motor and workmen’s compensation insurance.

The company has also opened an investment banking subsidiary, which serves not only as a diversifier and an additional source of income; but also manages the investment portfolios of the parent company.

Moreover, the company is internationally rated AA by Global Credit Rating of South Africa.