Expense Ratio
Expense ratio is the Percentage of total management expenses to gross premiums.
This ratio relates level of the management efficiency. Industry average of 32%, which
tends to be influenced by National Insurance Company (NIC) and Aureol Insurance
Company (AIC) with very high management expenses
Return on equity
Return on equity is net profit after tax as a percentage of shareholders funds (equity). It
measures the profitability of companies, the higher the percentage, the more
profitable the company.
It was noticed that Sierra Leone Insurance Company (SLICO) recorded negative
returns, partly due to huge increases in underwriting Loss resulting from high
management expenses, without generating additional premium Income, because
of cessation in business during 2004 and early part of 2005, Transworld,
International Insurance Company (IIC) and, Medical and General Insurance
Company (MAGIC), returns improves considerably.
Reliance Insurance trust corporation (RITCORP) recorded a decrease in returns
for 2005 when compared with 2004 returns, though the 2005 returns are above
the industry average. AIC and Marine & General (M&G) continues to improve
their returns on equity in excess of the industry average, whilst NIC maintains
its returns over the years.
Outstanding premiums as a % of gross premiums
Outstanding premium as a percentage of gross premium compare outstanding
premiums as at the end of the year to the total premiums written during the year. This is
an efficiency ratio which tries to assess how well management makes use of the
company's assets.
Specifically, the rationale for utilizing such ratio is to depict the length of time
management takes to collect premium debts and put them into effective use. IIC