“We delivered sound results having taken decisive early actions to protect our workforce, improve our financial strength, streamline operations and reinforce our distribution strategy.” This is the statement the managing director and chief executive officer, AIICO Insurance Plc, Mr. Babatunde Fajemirokun, reflecting on the performance of the company in 2020.
AIICO gross premium in 2020 grew by 23% y-o-y to N62bn against N50.1bn for FY 2019 and the raised figure was due to improved agency force, incerased focus on partnerships and better relationship with corporates.
However, there was a trail of underwriting loss of N36.3bn, due to reserve for new policies in the life business and changes in actuarial reserves in the business for policies written in 2020 and prior years.
Also punctuating the performance were several drops. The value of liabilities and assets in life business on the short and long ends declined by 7.7% and 5.5% respectively in 2020. Besides, the company statement noted that some of the life products require higher reserving requirements which results in an increase in our liabilities, thereby reducing reported underwriting profits.
The general business was also hit by increased claims in fire, due largely to the civil unrest across the country, and special lines oil lines. While investment income made a mild leap of 13% from N10bn to N11.7bn; profit before tax declined by 26% to N4.6bn from previous N6.1bn. The major cause of this the company stated, was “lower than expected profits in life business as a result of higher than expected reserving requirements. However, the loss spill spared general insurance and wealth management businesses, increased contribution to profits prevailed.
Other performance factors show profit after tax drop by 12.9% to close at N5bn as against N5.7bn for the previous year. Profit also declined by 11.1% from N5.9bn to N5.2bn.
However, total assets increased by 52.4% to close at N243.1bn, the previous mark was N159.5bn. Total liabilities meanwhile, grew by 59.6% to N208.4bn. It was N130.6bn the previous year. On increase also was total equity, it increased by 19.9% to N34.7bn against the 2019 figure of N28.9bn.
Admitting the global pandemic strain on business and Nigeria’s second recession in five years, Fajemirokun said AIICO by “decisive early actions” prepared to leap over vicissitudes.
He speaks: “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% 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%. We deploy this capital judiciously, generating risk-adjusted returns for our shareholders, and ensuring that we continue to keep our promises.”