Yemisi Izuora
AIICO Insurance Plc, has released its financial results for the year ended December 31, 2019, showing that the groups gross written premiums increased 33 per cent to N50.1 billion from N37.7 billion in 2018.
This outstanding performance was predominantly driven by growth across all lines of business within the Group.
The report further showed that Profit before tax (PBT) soared to N6.2 billion, an increment of 78 per cent compared to the N3.5 billon achieved in 2018. Profit after tax (PAT) also grew by 88 per cent to N5.9 billion, compared to N3.2 billion in 2018. Basic earnings per share (EPS) increased by 89 per cent from 44k in 2018 to 83k in 2019.
According to the Managing Director / Chief Executive Officer, Mr. Babatunde Fajemirokun, “Over the course of 2019, we undertook a thorough review of our businesses with a clear aspiration to attain market leadership through profitable growth”. Stemming from the progress made so far, it is my belief that we are on course and have the right strategy in place to deliver even more sterling performance in the years ahead.”
In accordance with our commitment to fulfilment of our obligations to our clients, gross claims grew by 6 per cent from N29.0 billion in 2018 to N30.6 billion in 2019. From this amount, about 75 per cent was for benefits and claims payment in our Life business with the remaining 25 per cent incurred in the Non-Life business.
The Group, however, experienced an underwriting loss of N6.34 billion in 2019. This is predominantly driven by the increase in life technical reserves (change in life funds) in the Life business. The Non-Life business achieved N2.4 billion underwriting profit in 2019. This increase in life technical reserves is based on significant growth in new business, impact of changes in yields on federal government securities and assumption changes such as mortality, withdrawal experiences, policy expenses and increased inflation.
Hence, the underwriting loss of N6.3 billion is a notional loss (non-cash) given the format of insurance accounts used for a composite player in Nigeria. For Life insurance businesses, investment income (including the increase in fair value of assets backing life technical reserves) is typically combined with premium income to fund the technical reserves (change in life funds), meet part of claims settlement then contribute to cover expenses and return a profit to shareholders.
Therefore, adjusting for investment income for the Life insurance business would result in an underwriting profit for the composite insurance operation and the Company.
The total assets grew by 45 per cent from N110 billion in 2018 to N159.5 billion in 2019.
Having received approval to increase the authorized share capital of the Company in line with the new regulatory capital requirements for a composite insurer, Shareholders’ Equity of the Company increased by 92 per cent to N27.9 billion (from N14.5 billion in 2018) driven by the successful completion of a private placement investment by two strategic investors (LeapFrog Nigeria Insurance Holdings Limited and AIICO Bahamas Nigeria Limited) and improvements in retained earnings.
This has also led to an upward review of the Company’s paid up share capital increasing from N6.1bn to N11.3bn with plans underway to raise the outstanding capital by way of a rights issue. According to the Company, the new capital injection will strengthen its balance sheet and provide additional capacity to underwrite more risks.
Speaking further on the Company’s strategic aspirations, Mr. Fajemirokun, stated that “we are in unprecedented times, and only the bold and agile will survive. That is why AIICO will continue to push boundaries to break new grounds and more importantly, we will keep adapting to change, identifying and introducing innovative ways of working and providing our customers with distinctive experiences. This is the only way to succeed in the long term. We remain committed to the full execution of our strategic objectives of becoming a best-in-class lifestyle company and delivering superior value to our Shareholders”.