AIICO Insurance Plc, has announced its financial results for the year ended December 31, 2017, showing growth in its gross premiums to N32.1 billion from N27.06 billion reported in 2016.
This represents an increase of N5.03 billion or 19 percent from the previous year’s figure.
The company’s diluted earnings per share for the year were 13 kobo per share, down from 105 kobo per share in 2016.
Disclosing this to journalists at a press briefing in Lagos, AIICO Insurance Managing Director, Edwin Igbiti, said: â€œWe experienced significant growth as a company in 2017, 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.â€
On the company’s performance in life business during the period, Igbiti, said: “our life business grew by 15 percent 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 by 29 percent in 2017 to N16.4 billion from N12.8 billion in 2016.
For non -life business, the AIICO Insurance boss said the company grew its premium from N7.6 billion in 2016 to N8.7 billion in 2017, showing 15 percent growth
He said the company has set plans for better growth in this regard adding that the management has worked to improve on relationships with agents, brokers and various intermediaries this year to improve performance.
According to him, a change in premiums in the company’s health management subsidiary is recognised such as premiums from some capitated plans, previously unrecognised in the income statement were recognised in 2017 adding that the impact of this change was N1 billion.
He said Gross premium income of the company reduced by 29percent or N8.7 billion in 2017 to N21.3 billion from N30 billion in 2016. Explaining reason for this, Igbiti said,
“For insurance companies, premiums are recognised as income when they are earned. the difference between gross premiums written and gross premium income (gross premiums earned) is the change in policyholdersâ€™ liabilities or reserves (reflected as change in unearned premiums balance for accounting purposes with the total policyholdersâ€™ liability reflected on the company’s balance sheet through the insurance contract and investment contract liabilities line items”.
He said for AIICO, especially its life business, the company’s books the premiums in Gross Premiums Written and deducts the transfer to policyholdersâ€™ liabilities or reserves. The result is Gross Premium Income. The transfers to policyholdersâ€™ liabilities or reserves are based on an increase/decrease in the total valuation of our cumulative book of insurance and investment contracts”, Igbiti explained.
Furthermore, he said that the reduction in gross premium income in 2017 is largely due to the increase in the size of policyholdersâ€™ liabilities in the company’s 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 growth in the business that led to reserves of N5.0 billion to be set up for new business acquired in the year and 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 policyholdersâ€™ liabilities of approximately N4.0 billion.