AIICO Insurance Plc has reported improved underwriting performance amid a challenging environment, driven by better results in its Life and Non-Life business as rising bond yields that underpinned the investment income helped propel profit.
Across the business, AIICO Insurance’s combined ratio improved to 97.77 percent in the fourth quarter (Q4) of 2022, compared with 105.01 percent as at December 2021, according to MoneyCentral.
A reduction in the combined ratio means the insurer is earning more revenues from its collected premiums relative to the claims it pays out.
Interestingly, the company’s net income increased by 39.51 percent to N6.85 billion in the period under review from N4.91 billion as at December 2021.
Of course, the uptick in profit was largely driven by a double digit growth in investment income, thanks to the central bank’s tightening cycle aimed at taming stubborn inflation that led to elevated bond yields.
Insurers who invest part of premium income they receive from policyholders in fixed income securities enjoy juicy yields, but the small ones who do not have liquidity or cash flows are left out.
Investment income was up by 38.89 percent to N18.57 billion in the period under review from N13.37 billion as at December 2021.
The Nigeria 10 year government bond has a 13.948 percent yield as of January 31, 2022, that compares with a yield of 3.67 percent as of November 2020, according to data from World Government Bonds.
AIICO Insurance paid N44.96 billion to policy holders in 2022, which is 12.95 percent higher than 2021’s N39.91 billion as it continues to meet its obligations.
Claims ratio fell to 63.63 percent in the period under review from 68.20 percent the previous year.
Expense ratio reduced to 34.09 percent from 36.81 percent, which is lower than 105.02 percent in 2015, when a sharp drop in crude oil price tipped the country into its first recession in 25 years in 2016.
The insurer saw gross premium written (GPW) was up 21.72 percent to N88.23 billion in the period under review from N70.65 billion the previous year.
It earned N54.45 billion from Life (individual and Group) as at December 2022, and that represents a 9.49 percent increase from 2021’s N49.73 billion.
Revenue from Non-Life Business was up 39.12 percent to N26.49 billion in the period under review from N19.04 billion the previous year.