Insurance

AIICO tops insurance market chart in 2020 with N62bn gross written premium, explores opportunities in East, West Africa

From left: Adewale Kadri, Executive Director, Technical; Segun Olalandu, Head, Marketing;
Mrs. Sarah Adeniran, Head, Brokers Management; Babatunde Fajemirokun, MD/CEO – seated at the middle;
Mrs. Titilola Okunlola, Head, Technical – Retail Business Division;
Akinwunmi Olaseni, Head of Sales, Retail Business Division; Olusanjo Shodimu, Head, Shared Services Division at the event.

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Chuks Udo Okonta

With N62 billion gross written premium in 2020, which was the highest recorded in the insurance sector, AIICO Insurance Plc, is taking no rest as it is determined to sustain the feat. To this end, the company is set to explore insurance opportunities across East and West Africa and locally maximizing gains from a new concept known as embedded Insurance.

The Managing Director/Chief Executive Officer of the frontline underwriting firm, Babatunde Fajemirokun, while speaking with Journalists on the sideline of just concluded African Insurance Organisation (AIO) Conference, in Lagos, said the firm had revised its vision and that the company’s board has given the management the approval to look beyond Nigeria insurance space and explore opportunities across Sub-Saharan Africa.

“Despite the fact that Nigeria has one of the lowest penetration rate in Africa, we still believe that in terms of our business models to improve the level of diversification, is important to look outside.

“We still very much at preliminary stages, but we are reviewing other markets to see the opportunities for us to expand into those markets but we have not concluded yet.

“Our view is that when we look at some of these other digital place that have come into Nigeria in digital banking at various other segments one of the reasons why they are getting the valuations that they are getting is because is it an African thing. Looking at Africa diversify’s the business sufficiently to be able to command a premium on the value of the shares.

”If you look at markets such as Kenya, other markets in east Africa there is a lot of innovation going on in those markets. Kenya for instance has one of biggest in terms of digital instruments. It will be good to explore some of those types of opportunities in those markets,” he posited.

He submitted that the firm is looking at East Africa, West Africa not really the North, adding that there are interesting opportunities that the firm is looking to explore within those markets.

Divisional Head, Shared Services, AIICO Insurance Plc, Olusanjo Shodimu, said the firm is also enlarging it frontiers in the retail market space through embedded underwriting.

“We have adopted two approaches to managing micro insurance. What we are doing is seeking partnership by identifying people operating within the space of business we want to do. There is a new concept called embedded insurance, that is partnering people with large customer base and putting insurance on their platforms,” he said.

Financial performance highlights

Gross written premium grew by 23.6% y-o-y 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.
Underwriting loss of ₦36.3 billion (FY 2019: ₦7.7 billion) 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.
There were significant movements in investment yields which affected the value of liabilities and assets in our Life business. On the short and long ends of the yield curve, yields declined by about 7.7% and 5.5% 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 22.6% 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% 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% 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)
Total equity increased by 19.9% to ₦34.7 billion in FY 2020 (FY 2019: ₦28.9 billion)

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