AIICO Insurance has reported that its Gross written Premium (GWP) for first quarter 2021 grew by 12.2 per cent year-on-year to N19.7 billion, compared to N17.6 billion recorded in first quarter 2020.
Mr Segun Olalandu, the insurer’s Head, Strategic Marketing and Communications Department said this in a statement made available to newsmen in Lagos.
Olalandu explained that the performance was due to a year-on-year increase of 34.0 per cent in the General Insurance business , 35.7 per cent of gross written premiums which stood at N7.0 billion compared to 4.6 billion recorded in first quarter 2020.
He noted that the underwriting profit of N27.7 billion recorded in first quarter 2021 compared to N131.0 million in the previous year also contributed to the rise while changes in sovereign bond yielded impact in the value of the company’s liabilities and assets.
According to him, 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.”
According to him, the total investment income declined to a loss of N24.1 billion in first quarter 2021 compared to N4.7 billion in first quarter 2020.
Olalandu said that this was as the Federal Government of Nigeria bond yields rose, affecting the fair value of the insurer’s financial assets because government’s bonds make up most of the company’s investment portfolio.
The insurer’s spokesman said that the profit before tax increased by 11.3 per cent year-on-year to N1.6 billion in the quarter under review compared to 1.4 billion recorded in 2020.
Olalandu noted that on the back of improved overall profitability in the insurance businesses (Life, General and HMO), profits in the insurer’s Wealth Management business declined in first quarter 2021 as capital markets turned bearish during the quarter.
He expressed that profit after tax declined by 17.6 per cent year-on-year to Make a1.5 billion in first quarter 2021 compared to N1.9 billion recorded in first quarter 2020.
Olalandu said that tax credits of N435.7 million in first quarter 2020 improved after tax performance compared to first quarter 2021.
“Total assets declined by 11.1 per cent to N216.2 billion in first quarter 2021 compared to N243.1 billion in 2020 financial year , driven by a reduction in financial assets (-9.3 per cent ; 79.0 per cent of total assets) and cash and cash equivalents (-38.2 per cent ; 9.1 per cent of total assets).
“Total liabilities declined by 13.4 per cent to N180.6 billion in first quarter 2021 compared to N208.4 billion in 2020 finacial year, he said.
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 first quarter 2021 to N34.7 billion in first quarter 2020.
Commenting, Mr Babatunde Fajemirokun, Managing Director and Chief Executive Officer of the insurance firm decried 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 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.
” Building on this, we recorded premium growth of 12.2 per cent year -on-year to N19.7 billion in first quarter 2021 and our financial position remains resilient as well – shareholders’ funds increased 3.3 per cent year-to-date to N34.8 billion, ” he 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 ( IMF) 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.
Fajemirokun said that the robust financial position of the insurance firm ensures that it can meet its obligations when they arise.
AIICO Insurance is a leading composite insurer in Nigeria with a record of serving its customers for over 50 years.
Founded in 1963, AIICO provides life and health insurance, general insurance and investment management services to create and protect wealth for individuals, families and corporate customers.