AIICO Insurance Plc: Earnings and Cash Flow Forecast for Q1 2025

Introduction
AIICO Insurance Plc has released its earnings and cash flow forecast for the first quarter of 2025, reflecting a strong performance trajectory under the IFRS 17 reporting framework. The projections highlight robust gross written premiums, significant investment income, and a steady increase in cash flow. These results are indicative of the company’s resilience and strategic focus on diversified insurance and investment activities.

Key Financial Highlights for Q1 2025

1. Gross Written Premium (GWP):
   • Projected at ₦50.5 billion, driven by seasonal trends in premium receipts.
   • Business Segment Contributions:
     • Non-Life Insurance: 35.0%
     • Ordinary Life Insurance: 38.4%
     • Group Life: 11.8%
     • Annuities: 14.9%
2. Insurance Revenue:
   • Estimated at ₦27.9 billion, reflecting sustained growth across all business segments.
3. Profitability Metrics:
   • Profit Before Tax (PBT): ₦2.66 billion
   • Profit After Tax (PAT): ₦2.42 billion
   • Investment income, primarily driven by bond investments, is expected to reach ₦11.07 billion.
4. Net Insurance and Investment Result:
   • Totaling ₦2.50 billion, supported by a balance of insurance service results and net investment income.

Expense Analysis

1. Insurance Service Expense:
   • Forecasted at ₦24.27 billion, with a refined classification under IFRS 17 that now includes directly attributable overheads.
2. Net Insurance Finance Result:
   • A net expense of ₦9.62 billion, reflecting finance costs associated with insurance and reinsurance contracts.
3. Other Expenses:
   • Projected at ₦202.88 million, with adjustments ensuring accurate attribution between insurance service expenses and non-attributable overheads.

Cash Flow Projections

AIICO Insurance expects a positive net cash flow for Q1 2025, driven by strong operating cash inflows and prudent financial management.

1. Operating Activities:
   • Net cash inflow of ₦9.50 billion, showcasing robust premium collection and investment returns.
2. Investing Activities:
   • A net outflow of ₦5.85 billion, reflecting strategic investments in bonds and other financial assets to ensure long-term returns.
3. Net Increase in Cash and Cash Equivalents:
   • Closing cash balance projected at ₦29.0 billion, up from ₦25.35 billion at the start of the quarter.

Strategic Insights and Drivers

1. Segmental Growth:
   • A balanced portfolio of life and non-life insurance businesses ensures revenue diversification and stability.
2. Investment Income:
   • Driven by bond investments and other financial instruments, expected to yield ₦11.07 billion in Q1.
3. Impact of IFRS 17:
   • Transition to IFRS 17 in 2023 has improved the classification of expenses, enhancing financial reporting accuracy.
4. Foreign Exchange and Market Conditions:
   • While the forecast assumes minimal impact from foreign exchange fluctuations and net fair value changes, these remain areas of uncertainty depending on market dynamics.

Conclusion

AIICO Insurance Plc’s Q1 2025 earnings and cash flow forecast underscores its strong operational and financial performance. With projected gross written premiums of ₦50.5 billion and a PAT of ₦2.42 billion, the company is well-positioned to maintain its growth trajectory. Strategic investments in bonds and diversification across insurance segments further enhance its resilience in an evolving market landscape.

For investors and stakeholders, AIICO’s performance outlook for Q1 2025 reflects a promising start to the year, emphasizing growth, stability, and innovation in Nigeria’s insurance sector.