AIICO Insurance Plc has announced its audited results for the year ended 31 December 2020, with a gross written premium growth of 23.6 percent y-o-y to N62 billion, as against N50.1 billion in 2019.
This performance according to the company was driven by its continued investment in agency force, increased focus on partnerships and better relationship with corporates.
It however recorded an underwriting loss of N36.3 billion at the end of the review year, as against N7.7 billion in 2019, and this is attributed to 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.
According to the Company, there were significant movements in investment yields which affected the value of liabilities and assets in the life business.
“On the short and long ends of the yield curve, yield declined by about 7.7 percent and 5.5 percent 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” the Copany said.
The Company’s investment income grew by 13.1 percent y-o-y to N11.7 billion in 2020 , against N10.4 billion from increased assets under management, while the profit before tax from continuing operations declined by 22.6 percent y-o-y to N4.6 billion in 2020, as N6.0 billion in 2019.
This was largely due to the lower-than-expected profits in her Life business as a result of higher-than-expected reserving requirements/low yields. However, General Insurance and Wealth Management businesses increased their contribution to profits.
Total assets increased by 52.4 percent to N243.1 billion in 2020, as against N159.5 in 2019.
Commenting on the results, Babatunde Fajemirokun, managing director/CEO 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 percent 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 percent 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 percent. We deploy this capital judiciously, generating risk-adjusted returns for our shareholders, and ensuring that we can continue to keep our promises.”
