AIICO Insurance Plc grew its premium income to N32.1 billion in its 2017 financial year end, up from N27.06 billion it posted in its 2016 financial year, representing an increase of N5.03 billion or 19 per cent.
Diluted earnings per share for the year were 13 kobo per share, down from 105 kobo per share in 2016. Speaking during a media parley at the company’s headquarter in Lagos last week, the managing director, Mr. Edwin Igbiti, said, his insurer experienced significant growth as a company in 2017, while it had to significantly increase capacity and improve its processes to meet up with customer demands.
Igbiti, who was represented by executive director, operations, Mr. Babatunde Fajemirokun, added that there was improved performance in its life business, as this line of business grew by 15 per cent from N18.8 billion to N21.6 billion in 2017.
This growth, he said, was driven by the increased popularity of its traditional life products, even as its ordinary life business grew by 29 per cent in 2017 to N16.4 billion from N12.8 billion in 2016. Stating that its non-life business grew from N7.6 billion in 2016 to N8.7 billion in 2017, translating to N1.1 billion or 15 per cent increase, he added that AIICO Insurance had worked to improve its relationships with agents, brokers and various intermediaries in its 2017 financial year to improve performance.
Noting that there was a change in how premiums in its health management subsidiary are recognised, he said, premiums from some capitated plans, previously unrecognised in the income statement were recognised in 2017, which generated extra N1 billion. Gross premium income of the company, he pointed out, reduced by 29 per cent or N8.7 billion in 2017 to N21.3 billion from N30 billion it was in 2016.
For insurance companies, he said, premiums are recognised as income when they are earned, hence, the difference between gross premiums written and gross premium income (gross premiums earned) is the change in policyholders’ liabilities or reserves with the total policyholders’ liability reflected on its balance sheet through the insurance contract and investment contract liabilities line items.
According to him, “For AIICO, especially in our life business, the company books the premiums in Gross Premiums Written and deducts the transfer to policyholders’ liabilities or reserves. The result is Gross Premium Income. The transfers to policyholders’ liabilities or reserves are based on an increase/decrease in the total valuation of our cumulative book of insurance and investment contracts.”
He said the reduction in gross premium income in 2017 is largely due to the increase in the size of policyholders’ liabilities in its life business as life contract liabilities grew by N9.95 billion in 2017 compared to a decline of N3.7 billion in 2016.
This, he stressed, was caused by growth in the business that led to reserves of N5 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 policyholders’ liabilities of approximately N4billion
“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,” he pointed out.