•Total assets hit ₦243.1bn
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Chuks Udo Okonta
AIICO Insurance Plc (“AIICO”, or “the Group”) announced its audited results for the year ended 31 December 2020, which highlights showed that the gross written premium grew by 23.6 per cent year-on-year to ₦62.0 billion in FY 2020 (FY 2019: ₦50.1 billion), benefitting from the continued investment in our agency force, an increased focus on partnerships and better relationship with corporates.
A statement by the firm’s Head, Strategic Marketing & Communications,
Segun Olalandu, noted that an underwriting loss of ₦36.3 billion (FY 2019: ₦7.7 billion) attained was as a result of two main factors: 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 firm, there were significant movements in investment yields which affected the value of liabilities and assets in its Life business. 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.
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 22.6per cent y-o-y to ₦4.6 billion in FY 2020 (FY 2019: ₦6.0 billion). 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)
Profit for the year declined 11.1% y-o-y to ₦5.2 billion in FY 2020 (FY 2019: ₦5.9 billion).
Total assets increased by 52.4 per cent to ₦243.1 billion in FY 2020 (FY 2019: ₦159.5 billion).
Total liabilities grew by 59.6 per cent to ₦208.4 billion in FY 2020 (FY 2019: ₦130.6 billion).
Total equity increased by 19.9 per cent to ₦34.7 billion in FY 2020 (FY 2019: ₦28.9 billion)
Commenting on the results, 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 per cent 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 per cent. 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.