AIICO Insurance Grows Underwriting Profit By 326%
AIICO Insurance Plc, said it grew its underwriting profit for the year ended December 31st,2016 by 326 percent.
Its Gross Premiums for the period however witnessed slide from N32.9 billion in 2015 to N27.1billion in 2016 down by N5.8billion (or 17.8per cent).
Announcing this to shareholders at the 2016 annual general meeting of the company held in Lagos recently, AIICO Insurance Managing Director, Edwin Igbiti, explained that the reduction in the company’s gross premium during the period was due to its strategic decision to reduce premiums written in the longterm business (retirement product) as a result of higher market risks.
Igbiti said AIICO’s underwriting profit for the period, increased from a loss ratio of N5.5billion to a profit of N12.45billion across the group driven by slight underwriting improvements in the non-life business and release of the reserves in the life business.
He added: “Our decision to diversify the long-term business to include protection and endowment products – this increased by N3.4 billion (36%) in 2016.
“Economic conditions that affected business in 2016 key accounts in the corporate business segment were not renewed.
We recorded Gross Premium Income of N30 billion in 2016 up N19.6 billion (or 188%) from N10.4 billion in 2015.”
He said this was as a result of the reduction in the company’s annuity reserves, which is recorded as a decrease in unearned premiums in its income statement and a release to profits. Furthermore, he said: “Actual investment income increased by 27 percent in 2016 to N7.2 billion from N5.7 billion. Our asset management capabilities continue to be a key strength for the company as we recorded a significant increase in investment income due to high yield.”
According to him, book value of equity/shareholders’ funds as at December 31, 2016 was N8.3billion, down by N1billion (or 11%). He attributed this to the reduction in the value of assets as interest rates increased.
Igbiti said the company also incurred some one-time expenses during the year (such as bank duty taxes) totaling almost N2 billion, adding that the cumulative effect of the reduction in asset values is found in other comprehensive income as a loss in available-for-sale assets and is reflected in a reduction in shareholder’s equity.