AIICO Insurance grows Gross Written Profit by 12.2% in Q1

AIICO Insurance Plc has posted Gross written Premium (GWP) of N19.7 billion for the first quarter March 31, 2021.

The GWP represented an increase of 12.2 per cent when compared with N17.6 billion posted in the corresponding period of 2020.

Mr Segun Olalandu, the company’s Head, Strategic Marketing and Communications Department, said this in a statement on Tuesday in Lagos.

Olalandu explained that the performance was due to an increase of 34.0 per cent in the general insurance business.

He noted that the underwriting profit of N27.7 billion recorded during the review period compared with N131.0 million achieved in the corresponding period also contributed to the rise.

Olalandu added that changes in the sovereign bond yield impacted in the value of the company’s liabilities and assets.

He explained that these movements were reflected in the change in life and annuity funds as well as fair value, realised gains or losses on the income statement.

Olalandu said: “In the life business, we are typically concerned about whether there is a surplus or deficit of assets over liabilities because of these movements.

“However, because of limitations in financial reporting, changes in liabilities affect underwriting profits while changes in assets are reported below underwriting profits.

“The effect is the significant variation in underwriting profits especially in volatile investment yield environments, such as we have in Nigeria.

“During first quarter 2021, annualised yields rose by 430 basis points to 11.7 per cent at the long end of the yield curve, leading to a reduction in the fair values of assets and liabilities.

“The reduction in liabilities led to positive underwriting profit while the reduction in assets is reflected in the fair value losses for the period.”

Olalandu said that the profit before tax increased by 11.3 per cent to N1.6 billion in the quarter under review against N1.4 billion recorded in 2020.

He added that profit after tax declined by 17.6 per cent to N1.5 billion during the period compared to N1.9 billion recorded in the first quarter of 2020.

Olalandu said total liabilities declined by 13.4 per cent to N180.6 billion in the review period from N208.4 billion posted in the comparative period.

According to him, it was driven mainly by decline in insurance contract liabilities of 15.9 per cent from the rise in yields and reserving for new business and fixed income liabilities of 9.5 per cent in the insurer’s asset management business.

Olalandu said that total equity increased by 2.8 per cent to N35.6 billion in the review period against N34.7 billion in first quarter 2020.

Commenting on the performance, Mr Babatunde Fajemirokun, the company’s Managing Director and Chief Executive Officer, was quoted by the statement as saying that the world was in a difficult moment and Nigeria had not been spared.

Fajemirokun expressed that even as the world started to move on from the COVID-19 pandemic, the economic after-effects would reverberate for a while.

“However, there is some reason for optimism – economic activities have improved, and the country will likely exit the recession.

“Oil prices remain elevated, and the pandemic-induced lockdowns are easing all over the world.

“We made significant strides in 2020; implementing our business continuity plan and leveraging technology to improve processes and get closer to our customers,” Fajemirokun said.

According to him, the firm nonetheless, remain optimistic that economic activities will continue to rebound in coming periods.

Fajemirokun said that the International Monetary Fund had revised its economic growth forecasts for Nigeria upward to 2.5 per cent from 1.5 per cent.

The managing director also said that insurance, like every other sector, would have its role to play in the economic recovery as enablers of economic growth.

This, he added, would be by assuming risks that encourage long-term direct investment which enhances production and job creation.