AIICO Insurance Q1 Profit Slumps on Finance Expense

AIICO Insurance Plc has fallen off the cliff as first quarter profit receded on the back of a sharp fall in net insurance finance expense, as rising claims costs validates an inflationary environment that is lifting the replacement costs of assets.

Of course, it appears it is the end of free money for insurers as foreign exchange gains have waned, which is responsible for margin compression as insurers will have to tap the retail end of the market to underpin earnings.

For the first three months through March 2025, AIICO Insurance net income reduced by 51.43 percent to N4.66 billion from N9.26 billion as at March 2024.

Gross written premium (GWP) was up 11.67 percent to N54.81 billion in March 2025 from N49.08 billion as at March 2024.

Net profit margin, which is calculated as profit as a percentage of insurance revenue, fell to 40.86 percent in March 2025 from 14.20 percent the previous year.

Deteriorating margins was caused by rising expenses due to inflation on attributable overheads, exchange rate volatility, and claims.

Properties that were indemnified when the exchange rate had not been depreciated have now skyrocketed, which means insurers are paying more in claims than the premium that they receive or collect, which raises concerns about the combined ratios that are above the 100 percent threshold.

Nigeria’s headline inflation rate surged to 24.23 percent in March 2025, according to data released by the National Bureau of Statistics (NBS).

The Nigerian currency, the naira, has lost about 71 percent of its value against the dollar since Bola Tinubu became president and embarked on foreign currency reforms.

AIICO earned N12.92 billion in investment income, which is 68.44 percent higher than 2024’s N7.67 billion. The rise in investment returns was underpinned by a high yield environment.

The company’s total assets stood at N439.71 billion as at March 2025, which is 5.86 percent higher than 2024’s N416.38 billion.

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