AIICO Insurance Plc has retained the number 1 spot as the largest insurer by assets in Nigeria which has Africa’s largest population, but there are concerns that sector players do not have capacity to undertake big ticket risk.
AIICO’s total asset hit N221.94 billion as at December 2021, and that compares with AXA Mansard’s N104.46 billion; Mutual Benefit, N85.39 billion; Cornerstone Insurance, N48.58 billion; African Alliance, N43.88 billion; Coronation Insurance, N40.54 billion; NEM Insurance, N36.32 billion; Linkage Assurance, N34.85 billion; Lasaco, N23.70 billion; Niger Insurance, N21.66 billion; Prestige Assurance, N21.37 billion, and Sovereign Trust, N16.42 billion.
AIICO Insurance: FY Financial Overview
While AIICO Insurance made money by parking policyholders’ premiums in fixed income securities, a huge fair value loss on financial assets pressured the insurer’s return on equity.
Of course, insurance companies in Africa’s largest economy who had ridden out of the coronavirus pandemic are now beset by inflationary pressures, currency volatility, a low yield environment, and huge energy costs undermining profitability.
AIICO Insurance’s return on average equity (ROAE) fell to 11.45 percent in December 2021 from 17.03 percent as at December 2020, according to MoneyCentral calculations.
The ROAE is abysmally poor when compared with the 106.37 percent recorded in 2017, a period that coincided with the introduction of a new foreign exchange window and the rebound in crude oil price that helped the country exit its first recession in 25 years.
Expectedly, net income reduced by 20.80 percent to N4.15 billion as at December 2021, despite an item of exceptional income of N2.37 billion, being money realized from the sale of a subsidiary.
During the year, AIICO Insurance sold part of its investments in AIICO Pensions, thereby reducing its holdings from 70.2 percent to 36.29 percent by the sales of 33.91 percent. This effectively reduced AIICO Pensions from a subsidiary to an associated company.
Profit was significantly pressured by N34.72 billion in net fair value loss on financial assets, and analysts attribute this to the low yield environment as the central bank stuck to a dovish tone.