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Business Finance Info & Updates

Q3: AIICO records 17% PAT increase

AIICO Insurance Plc says its Profit After Tax (PAT) increased by 17 per cent to N5.2 billion for the period ended September 30, 2020 from N4.5 billion recorded in the corresponding period of 2019.

This is even as its gross written premium for the period under review grew by 27 per cent year-on-year to N47.2 billion from N37.0 billion recorded in 2019 while profit before taxes dropped by seven per cent year-on-year, from N5.0 billion in Q3 2019 to N4.7 billion in Q3 2020.

Commenting on the firm’s performance, its Managing Director, Babatunde Fajemirokun said, the third quarter results demonstrated that the Company’s business remains steady, despite the changing client preferences and risk exposures that accompanied the COVID-19 pandemic.

He said, “Total equity grew 15 per cent year-to-date to N33.2 billion from N28.9 billion in December 2019 while, total assets increased by 55 per cent year-to-date to N245.8 billion from N159.5 billion in December 2019 driven by an increase in financial assets, including cash and cash equivalents. Financial assets increased because of the decline in investment yields and judicious investment of funds received for policies sold.

“Total liabilities increased by 63 per cent to N212.6 billion from N130.6 billion in December 2019 driven mainly by increases in insurance contract liabilities (from the decline in yields and reserving for new businesses) and fixed income liabilities (3rd party funds under management) in our asset management business.”

Fajemirokun further said, “Global and local macroeconomic headwinds continue to test the resilience of our business, and operating models as well as our business continuity plans and the strength of our relationships with our customers and partners.”

He said significant movements in investment yields has affected the value of liabilities and assets in the organisation’s life business, adding that on the short and long ends of the yield curve, yields have declined by about 5.3 per cent and 2.8 per cent respectively year-to-date.

The effects of these changes, he noted are reflected in the change in life and annuity funds and fair value gains or losses on the income statement, stressing that in addition, changing client preferences mean that there has been a change in our retail product mix. Some of these products, he noted require higher reserving requirements when sold which also results in an increase in liabilities, reducing reported profits. However, the increased contribution to profits from our general insurance and our asset management businesses highlight our strengths as a group. “Our general business continues to enjoy the confidence and support of our customers, despite the effects of the pandemic” he said.


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