FY2022 Performance: Revenue growth anchors positive bottom-line performance
- Profit after tax rose by 81.2% y/y to GHS 222.5mn, propelled by strong growth in revenue.
- Net income increased to GHS 1.6bn (+37.4% y/y), driven by strong growth in investment income and insurance premium.
- Net investment income rose by 84.1% y/y to GHS 451.2mn.
- Net insurance premium revenue increased by 21.3% y/y to GHS 1.0bn.
- Net expenses increased by 30.4% y/y to GHS 1.3bn, nudging the expense ratio to 49.5% (+2.6pp y/y). Losses arising from the DDEP pushed impairment charges up to GHS 328.9mn (+12,641.2% y/y).
1Q2023 Performance: Profit after tax grows on strong revenue performance
- Profit after tax grew by 24.0% y/y to GHS 52.4mn, driven by robust increase in revenue.
- Net income increased to GHS 394.9mn, driven by strong growth in investment income and insurance premium.
- Net investment income rose by 36.5% y/y to GHS 79.3mn.
- Net insurance premium revenue increased by 22.8% y/y to 285.0mn.
- Net expenses increased by 25.1% y/y to GHS 334.8mn, driven by a 19.2% y/y rise in net benefit and claims and 37.8% y/y increase in operating expenses.
Our View: Diversification benefits will keep shining through
- We were pleased to see EGL report growth in bottom-line performance in spite of the losses on investment securities arising from the DDEP.
- We maintain our expectation of sustained growth in EGL’s net income as the top insurer continues to benefit from its diversified portfolio of businesses and its market leadership.
- However, we flag the elevated inflationary pressures as a potential drag on the growth in gross premium in the near term. We reiterate that high policyholder surrenders and partial encashment from the life business may continue to play out as observed in 2022 given the difficult economic terrain.
- Overall, we expect EGL to remain resilient and record positive growth in earnings in 2023.
Valuation: Under Review
- EGL is trading at a P/B value of 0.4x and we intend to re-initiate coverage soon.