AIICO Insurance Plc has recorded a rise in gross written premium as it grew by 23.6 per cent Year on Year to N62.0 billion in FY’20 as against N50.1 billion in FY’19.
The underwriting firm in its audited report for year ended December 31, 2020, 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 N36.3 billion against N7.7 billion FY’19, 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 per cent y-o-y to N11.7 billion in FY’20 (FY 2019: N10.4 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 N4.6 billion in FY’20 against N6.0 billion in FY’19.
“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 N5.0 billion in FY’20 (FY’19: N5.7 billion and profit for the year declined 11.1 per cent yo- y to N5.2 billion in FY’20 (FY 2019: N5.9 billion,” AIICO said.
Other highlights showed that total assets increased by 52.4 per cent to N243.1 billion in FY’20 (FY 2019: N159.5 billion, Total liabilities grew by 59.6 per cent to N208.4 billion in FY’20 (FY’19: N130.6 billion while Total equity increased by 19.9 per cent to N34.7 billion in FY’20 (FY 2019: N28.9 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 per cent 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.”