L-R Mr Kadri Adewale- ED Technical, middle-Babatunde Fajemirokun ED Operations and Mr Sola Ajayi GM Retail Life).



AIICO Insurance PLC has announced a gross premium to the tune of N32.1 billion for its financial results year ended December 31, 2017.
This showed an increase of N5.03 billion or 19 per cent when compared to N27.06 billion recorded in the comparable period of 2016.
The firm equally recorded an increase of Diluted earnings per share for the year were 13 kobo per share, down from 105 kobo per share in 2016.
“We experienced significant growth as a company in 2017…” said Edwin Igbiti, MD/CEO of AIICO Insurance “We had to significantly increase our capacity and improve our processes to meet up with customer demands. Over the next few years, we have plans to grow our businesses; this means we must invest in technology and people to ensure our processes are more efficient to increase customer service levels.”

Here is the Full Highlights of the result

Premiums Written
The company wrote gross premiums of N32.1 billion in 2017. The growth of 19% compared to 2016 was because of:
a. Improved performance in the life business – our life business grew 15% from N18.8 billion to N21.6 billion in 2017. This growth was driven by the increased popularity of our traditional life products: the ordinary life business grew 29% in 2017 to N16.4 billion from N12.8 billion in 2016.
b. Growth in the non-life business – from N7.6 billion in 2016 to N8.7 billion in 2017, (c. N1.1 billion or 15%). We have worked to improve our relationships with agents, brokers and various intermediaries this year to improve performance.
c. A change in how premiums in our health management subsidiary are recognized – premiums from some capitated plans, previously unrecognized in the income statement were recognized in 2017. The impact of this change was c. N1 billion.
Gross Premium Income and Policyholders Reserves
Gross premium income reduced 29% or N8.7 billion in 2017 to N21.3 billion from N30 billion in 2016.
a. For insurance companies, premiums are recognized as income when they are earned. Therefore, the difference between gross premiums written and gross premium income (gross premiums earned) is the change in policyholders’ liabilities or reserves (reflected as change in unearned premiums balance for accounting purposes) with the total policyholders’ liability reflected on our balance sheet through the insurance contract and investment contract liabilities line items. For AIICO, especially in our life business, the company books the premiums in Gross Premiums Written and deducts the transfer to policyholders’ liabilities or reserves. The result is Gross Premium Income. The transfers to policyholders’ liabilities or reserves are based on an increase/decrease in the total valuation of our cumulative book of insurance and investment contracts.
b. The reduction in gross premium income in 2017 is largely due to the increase in the size of policyholders’ liabilities in our life business – Life contract liabilities grew by N9.95 billion in 2017 compared to a decline of N3.7 billion in 2016. This was caused by 1) growth in the business that led to reserves of N5.0 billion to be set up for new business acquired in the year and 2) a decline in the yields from long-term government bonds that led to a decrease in interest rates used to value these liabilities resulting in an increase in policyholders’ liabilities of approximately N4.0 billion – i) interest rates used to value the non-annuity policyholders liabilities declined to 13.75% p.a. in 2017 from 15.6% p.a. in 2016 and ii) interest rates used to value the annuity policyholders liabilities (PENCOM regulated annuities and others) declined to 13.5% p.a. in 2017 from 15.5% p.a.
c. IFRS requires that we value the liabilities at market-consistent interest rates. Hence, when interest rates rise, the value of our liabilities fall, and when interest rates fall, the value of our liabilities rise. When the value of liabilities falls, there is a release of profits, and when rates fall, there is a transfer from profits (premiums) to reserves. Changes in expense assumptions and other assumptions such as mortality tables (used to determine expected deaths and survival over future years) account for the balance of the movement.
Gross claims increased 55% to N23.3 billion from N14.9 billion in 2016.
a. This was due largely to the increase in benefits payments in the life business; benefits payments grew N6.1 billion or 53% to N17.6 billion in 2017. Our life business is dominated by contracts with our clients that stipulate payouts at pre-determined times. It is therefore logical that as the business grows, payouts grow accordingly. Critical activities are cash and investment management, two activities that we keep a very close eye on.
b. Claims in the non-life and health management increased by c. N1.1 billion each. Claims in health management increased due to the recognition of capitated premiums. These premiums are paid out directly to hospitals and are thus recognized as claims. In the non-life business, our net claims ratio increased marginally in 2017, from 37% to 42%.
As a company, we realize that we exist, not just to create wealth but to provide protection for our clients in return for premium payments. We, therefore, expect that as the company continues to grow, claims expenses will grow accordingly. The importance of investment operations is thus quite clear.

Investment Income​
Investment and Other income grew 92% in 2017 to N15.1 billion from N7.8 billion in 2016.

We continue to pursue an active investment strategy to take advantage of market conditions and improve our investment performance. The relatively low-interest rate environment provided an opportunity for the company to make some gains through trading. This was responsible for net realized gains of N5.3 billion compared to N336 million in 2016.

Profits after Tax and Total Comprehensive Income.

Profits after tax declined to N1.3 billion from N10.2 billion in 2016. Total comprehensive income, however, increased to a profit of N2.4 billion from a loss of N655 million in 2016.
a. The decline in profits after tax is due mainly to the decline in gross premium income (Outlined above)
b. While we recognize changes in the value of our liabilities in the income statement, changes in the values of the assets backing these liabilities are recognized in the statement of comprehensive income. This provides a more holistic picture of our performance as a company.

Statement of Financial Position

The company’s financial position remains robust, remains an area of focus for the company and is an indicator of our capacity and strength. Assets remain adequately matched to liabilities and legacy concerns have been appropriately addressed. Value has been created over the last 5 years.
• Total assets grew 19% to N92 billion in 2017 from N77.5 billion in 2016
• Total shareholders’ equity also grew 25% to N10.9 billion in 2017 from N8.7 billion in 2016. This growth of over N2.2 billion was achieved despite the complete derecognition of deferred tax assets in our balance sheet. This translated to a Net Asset per Share (Book value per share) of N1.58k compared to N1.25k in 2016.

AIICO Insurance Plc., is the leading life insurer in Nigeria. Founded in 1963, AIICO provides life and health insurance, general insurance, investment management and pension management services as a means to create and protect wealth for individuals, families and corporate customers. AIICO has the largest agency workforce in the industry and has branches in 23 states across Nigeria. For more information on AIICO’s product offerings and services, please visit www.aiicoplc.com or call the Customer Care Line on 07000 244 2272.