Explains reduction in premium
By Rosemary Onuoha
AIICO Insurance Plc said it grew its underwriting profit for the year ended December 31, 2016 by 326 percent.
The figure increased from a loss position of N5.5 billion to a profit of N12.45 billion across the group driven by slight underwriting improvements in the non life business and release of the reserves in the life business.
Its gross premium for the period, however, witnessed a 17.8 per cent decline to N27.1 billion from N32.9 billion in 2015.
Announcing this to shareholders at the 2016 Annual General Meeting of the company held in Lagos, Managing Director, Mr. Edwin Igbiti, explained reason for reduction in the company’s gross premium during the period saying it was due to its strategic decision to reduce premiums written in the long-term business (retirement product) as a result of higher market risks.
“Our decision to diversify the long-term business to include protection and endowment products – this increased by N3.4 billion (36 per cent) in 2016. 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”, said Igbiti.
According to him, book value of equity/shareholders funds as at December 31, 2016 was N8.3 billion, down by N1billion. He attributed this to the reduction in the value of assets as interest rates increased.
He 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.
According to Igbiti, total assets of the company as at December 31, 2016 stood at N77.5 billion down by N2.6 billion from N80.1 billion, explaining that this was due mainly to the reduction in the value of financial assets and the one-time expenses which decreased cash holdings and financial assets of the company.
He told shareholders that the company is poised to remain committed to its clients spread across the country, adding that their plan is to grow the insurance market premium by maintaining its close relationship with insurance brokers and its agency network.