AIICO Insurance Plc slashed a loss of N34.6 billion in financial assets in the prior financial year to N6 billion in 2022, which helped management to counter the impact of a massive increase in total underwriting expenses and build a profit of N7.5 billion for the year.
The company’s operations in the year were marked by volatile changes on both sides of costs and incomes but through it all, the risk underwriting firm was able to push ahead on the recovery track in 2022 after two years of profit decline.
The composite insurance company’s audited financial report for the year ended December 2022 shows an upsurge of 125 percent in total underwriting expenses to over N69 billion, which crashed underwriting profit from N30.3 billion in 2021 to N4.8 billion at the end of 2022 – a drop of N25.6 billion.
The high rise of N38.5 billion in total underwriting expenses was pressured by underwriting cost – which was spurred by another volatile change in annuity fund from a positive figure of almost N12 billion in 2021 to negative N2 billion in 2022.
A huge imbalance in the growth of underwriting income and expenses marked the company’s earnings story in 2022. While net underwriting income grew by N13 billion or 21.3 per cent in the year, total underwriting cost rose three times ahead to drain off underwriting profit.
An equally volatile drop in net fair value losses provided a compensatory cost saving that enabled the company to absorb the impact of the sharp fall in underwriting profit.
Net fair value losses fell from N34.6 billion in the preceding year to N6 billion, yielding a cost saving of N28.6 billion over the period. This is more than the N25.6 billion drop in underwriting profit, which powered the profit improvement in the year.
Another favourable development in the year is a top record increase of 40 percent in investment income to N18.7 billion. The strong growth is powered by an expansion of the company’s financial assets portfolio by 30.7 percent in the year to stand at N225.5 billion at the end of the year.
The big gain in investment earnings alongside the drop in net fair value losses provided the strength to meet increases in personnel and other administrative expenses and push pre-tax profit a clear 81 percent ahead to over N5 billion for the year.
After-tax profit from continuing operations amounted to N4.7 billion for the year, up from N2.5 billion in the preceding financial year. A profit of about N2.9 billion from discontinued operations topped up the closing profit for the year to N7.5 billion.
The company has applied earnings from the sale of an investment to keep up profit since it suffered a profit decline from N5.9 billion in 2019 to N5.2 billion in 2020. Despite a profit of about N2.4 billion from discontinued operations in 2021, its profit for the year still went down slightly to N4.9 billion.
The financial year 2022, therefore saw the company through to a rebound that enabled 53.6 percent growth in profit but yet below the over N10 billion profit figure established as far back as 2016.
AIICO Insurance grew net premium income by 20.8 percent to N70.7 billion, which is an accelerated growth from less than 11 percent improvement in 2021. With fee and commission income of over N3 billion, it recorded a net underwriting income of N74 billion for the year.
Gross claims expenses increased only slightly to a little over N48 billion but a sharp drop of 56.8 percent in claims recovery from reinsurers to N3 billion pushed net claims expenses up by 12.7 percent to roughly N45 billion.
AIICO Insurance earned 20 kobo per share at the end of the 2022 operations, improving from 13 kobo per share in 2021. The company is paying out 3 kobo per share to shareholders in cash dividends for its 2022 operations.
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