The big upturn is despite an upsurge in net finance expense in the second quarter from N1.4 billion to N10.3 billion year-on-year – which consumed much of the investment income of N12.6 billion for the quarter.
The profit drop in the first quarter was induced by the absence of profit from discontinued operations that swelled the company’s bottom line last year.
The strong growth in the second quarter has covered the gap for the company, bringing half-year profit at par with the corresponding figure last year at N5.3 billion.
The half-year interim financial report of the composite risk underwriter at the end of June 2023 shows that it maintained robust increases in insurance service results as well as investment income but huge increases in fair value loss and net finance expense hindered profit improvement.
Insurance service results jumped 176 percent to N6.9 billion at the end of June, reflecting an increase in insurance revenue against a decline in insurance service expenses.
While insurance revenue grew by 22 percent year-on-year to N27.9 billion at half year – an increase of N5 billion, insurance service expense went down by 8.5 percent to N15.3 billion.
Part of the cost saving was claimed by reinsurance expenses, which rose by 56.6 percent over the period to N5.7 billion.
Investment income maintained strong growth at an increase of 53.8 percent to over N12 billion at the half-year, reinforcing the high growth in the underwriting arm of the business.
Adding to the operating strength in investment activities is a shift from a net realised loss of N605 million to a net realised gain in excess of N382 million over the review period.
Further progress came from net fair value losses that dropped from N9.7 billion in the first quarter to N6.8 billion in the half-year. The drop reflects a net fair value gain of N2.9 billion recorded in the second quarter.
Yet another favourable development is a massive growth in other operating income from less than N96 million in the same period last year to N2.8 billion at the end of half-year operations.
Net investment income amounted to N8.7 billion, which is an increase of 14.7 percent year-on-year. This is a big turnaround for the company from a net investment loss of N3.9 billion at the end of the first quarter.
The remedy came from second-quarter operations that produced a net investment income of N12.6 billion.
The reverse is the case with respect to net finance income of N6.5 billion from insurance contracts in the first quarter, which was swallowed up by net finance expense of N10.3 billion in the second quarter, leaving net expense of N3.8 billion at the half year.
AIICO Insurance closed the half-year trading with net insurance and investment results of over N12 billion, advancing rapidly from N4.7 billion at the end of the first quarter and by 46.9 percent year-on-year.
With the moderated increase in operating expenses, the company raised pre-tax profit by about 118 percent to N5.8 billion at the half year, an upturn from a drop of over 12 percent to less than N1.4 billion in the first quarter.
After-tax profit however closed flat at N5.3 billion in reflection of a profit of N2.9 billion from discontinued operations that swelled last year’s half-year figure to N5.3 billion.
The company closed half-year operations with earnings per share of 16 kobo, slightly up from 15 kobo per share for the same period last year.
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