(Ecofin Agency) - Axa Mansard, the Nigerian arm of French Axa, which provides fire, accident, and miscellaneous risk insurance services, disposed of 4.37 billion naira ($11.3 million) of financial assets during the first quarter of 2020 to maintain a high level of cash flow amid the coronavirus pandemic. The insurer also sold 1.4 billion naira of rental investments.
These transactions enabled it to limit cash losses on its normal insurance activities. The company has disbursed 13.7 billion naira to deal with reinsurance premiums, repairs on claims incurred, and the settlement of certain expenses related to investment contracts; an expenditure that reduced its self-financing capacity by 3 billion naira. Also, Axa invested 2.35 billion naira in interest payments.
By selling some of its assets, Axa Mansard managed to increase its cash flow slightly to 19 billion naira, compared to 17.9 billion naira at the beginning of 2020. The insurer's first quarter was difficult, as is the case for many companies in the sector. Its risk management activities saw only a very small increase in gross margin (+474 million naira) compared to the first quarter of 2019.
Maintaining a high level of cash flow in this period of global economic crisis is essential even in the insurance segment. Increasing the number of new customers is difficult as many households and businesses feel pressure on their income and have to limit their spending. On the other hand, customers already under a contract may find themselves in claims situations and activate the benefit of their insurance policy.