IICO Insurance Group underwriting profit increased by 326 percent from a loss of N5.5 billion in the 2015 financial year to a profit of N12.45 billion last year, despite facing severe macroeconomic headwinds in the period under review, the Chairman, Bukola Oluwadiya, has said.
He made this known while addressing shareholders during the firm’s 47th Annual General Meeting in Lagos.
According to him, the growth was driven by slight underwriting improvements in the non-life business release of the reserves in the life business.
He said high interest rates reduced the value of long-term insurance contract liabilities of the group, which is recorded as a release in their statement of profit and loss.
He said as a result of their underwriting performance and increased investment income, after-tax profits increased by 756 per cent to N10.2 billion last year.
He said: “The movement in long-term liabilities reserves is mirrored by the movements in asset values backing these liabilities. This essentially means that the reduction in reserves is offset by the reduction in asset values.
The cumulative loss on fair value assets due to increased interest rates is reflected in the available for sale reserves, causing a 11 per cent reduction in shareholders’ funds.
“This informed our decision to retain a significant portion of the profits and its plan to inject more capital into the business to fund its growth plan and also achieve a resilient balance sheet to withstand market risks.”
Managing Director, AIICO Insurance Plc, Edwin Igbiti, explained that the company wrote gross premiums of N27.1 billion in 2016, down by N5.8billion from N32.9 billion the previous year.
“This is largely because of our strategic decision to reduce premiums written in the long-term business like retirement product due to higher market risks, making gross premiums to reduce by N9.2 billion in 2016.
“We also decided to turn down some unprofitable and low-return insurance premiums making our gross premiums to reduce by N600 million in 2016.
“Actual investment income increased 27 per cent 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,” he added.