[By VICTOR NZE]
AIICO Insurance Plc has declared a 27% year-on-year growth in gross premiums written (GPWs) in 2020, from N37.0 billion recorded in third quarter of 2019 to N47.2 billion over same period, this year. This is however, as the firm dropped profit before taxes (PBT) by7% year-on-year, from N5.0 billion in Q3 2019 to N4.7 billion in Q3 2020.
Also, in the same period under review, the company recorded an a huge increase in Profit-after-taxes (PAT) of 17 per cent year-on-year to N5.2 billion for the interim period ended September 30,2020 from N4.5 billion in the corresponding period in 2019.
Similarly, Total Assets increased by 55 per cent year-to-date to N245.8 billion from N159.5 billion in December 2019, which the firm explained, is driven by an increase in financial assets, including cash and cash equivalents.
As Total equity grew 15 per cent year-to-date to N33.2 billion from N28.9 billion in December 2019, AIICO’s Total Liabilities, however, increased by 63 per cent to N212.6 billion from N130.6 billion in December 2019.
This, it said, is 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.
Reacting to the third quarter financial results, Managing Director/Chief Executive Officer, Babatunde Fajemirokun, said the results ‘demonstrate that our business remains steady, despite the changing client preferences and risk exposures that have accompanied the COVID-19 pandemic. We have recorded strong top-line growth year-on-year as well as improved contribution from subsidiaries in our Group, especially our asset management business.’
The AIICO boss, however, pointed out that ‘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.’
“Significant movements in investment yields which affect the value of liabilities and assets in our life business. 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 are reflected in the change in life and annuity funds and fair value gains or losses on the income statement.
“In addition, changing client preferences mean that there has been a change in our retail product mix. Some of these products require higher reserving requirements when sold which also results in an increase in our 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.
“Our asset management business, AIICO Capital, continues to grow its client base while investing judiciously on behalf of its clients. Financial assets increased because of the decline in investment yields and judicious investment of funds received for policies sold,” he said.
The AIICO chief, therefore, assured of the company’s financial position, which he said not only ‘inspires confidence, but also ‘remains strong.’
“In our core insurance business, we will continue to offer innovative products that help our customers create and protect their wealth while leveraging the latest technology to meet our clients where they are. In addition, strong asset-liability management remains a pillar of our operating model.
“As a diversified financial services group, we will continue to ensure that businesses across our Group offer attractive products that enable us create value for all stakeholders.
“Our financial position remains strong, inspiring confidence in our ability to assume the risks our customers wish to transfer. We deploy this capital judiciously, generating risk adjusted returns for our shareholders, and ensuring that we can continue to keep our promises,” Fajemirokun said.