African Alliance Insurance Plc was incorporated as a Private Limited Liability Company on May 6th 1960 and was the first Indigenous Insurance company to carry out the business of Life Assurance in Nigeria.
The Company was originally set up in partnership with Munich Reinsurance Company of Germany, the largest Reinsurance Company in the world. Munich – Re still provides technical support to the Company on a need basis.
In 2005, African Alliance became the first licensed Takaful (Islamic Insurance) Operator in Nigeria – a concept borne of the desire to satisfy the needs of the Muslim Ummah in Nigeria through a robust selection of Sharia-compliant insurance and investment products based on the concepts of “Al-Mudarabah” and “Al-Tabarru”.
Also in 2005 African Alliance Insurance (then still a Limited Liability Company) in a Joint Venture with First Securities Discount House Limited (“FSDH”) set up Pensions Alliance Limited (“PAL”), a licensed Pension Fund Administrator.
In 2009, African Alliance was listed on the Nigerian Stock Exchange; thus becoming known as African Alliance Insurance Plc.
Following its’ successful recapitalization in 2007, African Alliance currently has a Shareholders’ Fund of about N 7.92bn, while the Company’s Gross Premium Income and Asset Base currently stand at about N 3.6bn and N 13.93bn respectively (figures as at December 2011 – unaudited).
African Alliance has 100 percent equity in Axiom Air Limited, a Cargo Airline Company and Frenchies Foods (Nigeria) Limited, a Restaurant and Catering Services Company.
Surge in premium income suggest efficient underwriting capacity
For the year ended 31 December 2013, Africa Alliance Insurance (AAI) recorded a gross premium written of N7.34 billion, representing an 87.24 percent increase from N3.92 billion the same period of the corresponding year (FY) 2012.
Similarly, gross premium income surged by 118.31 percent to N7.24 billion in FY 2014 compared with N3.33 billion as at December 31 2012. Net gross premium income also followed the same growth trajectory as it spiked by 118.54 percent to N7.19 billion in 2014 from N3.29 billion the preceding year.
Read also: Dear politician, your body speaks…
These impressive results at the top line levels mean the Nigerian insurer has an effective underwriting capacity. It also means the insurer is taking advantage of the ‘No Cover No Premium Policy to drive growth.
National Insurance Commission (NAICCOM) introduced the aforementioned policy to bolster the top line of insurance company. The Premiums must be paid for before an insurer can incept cover. This regulation was enforced by the regulator (NAICOM) with effect from January 1, 2013.
Increased costs calls for cost control mechanism
Net claims expenses were up by 134.72 percent to N5.61 billion in the review period as against N2.39 billion the same period of the corresponding year (FY) 2012. Total underwriting expenses increased by 80.70 percent to N721.40 million compared with N400 million the preceding year. Total operating expenses in the review rose by 17.83 percent to N1.85 billion as against N1.57 billion as at December 2012.
There is urgent need for the management given the high expenses to premium ratio of 112.53 percent it recorded. It means for every N1 earned in premium by the insurance company, it spent N1.12 on expenses.
Impairment write backs help boost bottom line
The Nigeria insurer posted a Profit after tax (PAT) of N1.40 billion in the period under review from a N315 million loss recorded last year- thanks to impairment write-backs of N1.41 million. It means the market values of recoverable amounts of assets are greater than the net book value in the balance sheet.
Similarly, profit before tax (PBT) of N1.46 billion was recorded in FY 2014 compared with a loss of N152.40 million as at December 2012
Strong balance sheet position
Total assets increased by 37.22 percent to N19.50 billion as against N14.21 billion the preceding year. The strong asset base was backed by a 161.88 percent increase in financial assets to N5.84 billion compared with N2.23 billion last year.
Property plant and equipment increased by 5.56 percent to N4.17 billion from N3.95 billion as at December 2012, while investment in associate jumped by 54.97 percent to N684.30 million.
BALA AUGIE
