AIICO Insurance Plc, has announced its audited results for the year ended 31 December 2020 showing a rise in Gross written premium grew by 23.6 per cent Year on Year to ₦62.0 billion in FY 2020 as against N50.1 billion in FY 2019.
The underwriting firm attributed the positive result to its investment in agency force, increased focus on partnerships and better relationship with corporates.
AIICO however reported underwriting loss of ₦36.3 billion against N7.7 billion FY 2019, as a result of reserving requirements for new policies underwritten in the life business in 2020; and changes in actuarial reserves in the life business for policies written in 2020 and prior years.
There were significant movements in investment yields which affected the value of liabilities and assets in its Life business, it explained adding that on the short and long ends of the yield curve, yields declined by about 7.7 per cent and 5.5 per cent respectively in 2020.
The effects of these changes are reflected in the change in life and annuity funds, as well as fair value gains or losses on the income statement.
In addition, changing client preferences mean that there has been a change in our retail product mix. Some of these products require higher reserving requirements which results in an increase in our liabilities, thereby reducing reported underwriting profits.
Underwriting performance in the general business also declined due to increased claims in our fire (due largely to the civil unrest across the country) and special oil lines while Investment income grew by 13.1% y-o-y to ₦11.7 billion in FY 2020 (FY 2019: ₦10.4 billion) from increased assets under management.
Profit before tax from continuing operations declined by 22.6 per cent Year on Year, y-o-y to ₦4.6 billion in FY 2020 against N6.0 billion in FY 2019.
This was largely due to the lower-than-expected profits in our Life business as a result of higher-than-expected reserving requirements/low yields. However, our General Insurance and Wealth Management businesses increased their contribution to profits.
Profit after tax from continuing operations declined by 12.9 per cent y-o-y to ₦5.0 billion in FY 2020 (FY 2019: ₦5.7 billion and Profit for the year declined 11.1% y-o-y to ₦5.2 billion in FY 2020 (FY 2019: ₦5.9 billion.
Other highlights showed that Total assets increased by 52.4% to ₦243.1 billion in FY 2020 (FY 2019: ₦159.5 billion, Total liabilities grew by 59.6% to ₦208.4 billion in FY 2020 (FY 2019: ₦130.6 billion while Total equity increased by 19.9% to ₦34.7 billion in FY 2020 (FY 2019: ₦28.9 billion)
Commenting on the results, Mr. Babatunde Fajemirokun, the Managing Director and Chief Executive Officer said, “The pandemic caused fundamental assumptions about the global marketplace to be questioned and led to a global economic upheaval. The Nigerian economy slipped into its second recession in five years, with the business environment further impacted by incidents of civil unrest. Despite these unprecedented macroeconomic disruptions, AIICO grew its total assets by 52.5% in the year under review. We delivered sound results having taken decisive early actions to protect our workforce, improve our financial strength, streamline operations and reinforce our distribution strategy”.
He stated further, “Over the past 5 years, we invested substantially in human capital and technology to significantly elevate our customer experience. This resulted in our gross written premiums growing 23.6% year-on-year despite restrictions caused by the pandemic. Our financial position remains strong, inspiring confidence in our ability to assume the risks our customers wish to transfer. Our investors echo this faith as our rights issue announced in September 2020 was oversubscribed by about 26%. We deploy this capital judiciously, generating risk-adjusted returns for our shareholders, and ensuring that we can continue to keep our promises.”
AIICO Insurance is a leading composite insurer in Nigeria with a record of serving our clients that dates back over 50 years. Founded in 1963, AIICO provides life and health insurance, general insurance, investment management and pension management services to create and protect wealth for individuals, families, and corporate customers.