AIICO Insurance Plc expects profits to climb in 2025, banking on robust investment income and stronger insurance service margins as it navigates a tighter regulatory and economic environment under IFRS 17 reporting standards.
The Lagos-based insurer projects a profit after tax of N19.6 billion for the year ending December 31, 2025, a reversal from the volatility seen in 2024 when earnings were inflated by one-off foreign exchange gains.
Profit before tax is forecast at N20.6 billion, supported by both higher premiums and investment returns, according to its earnings guidance released September 10.
Gross written premiums (GWP) are projected at N195.9 billion, with insurance revenue at N131.6 billion, underscoring the company’s reliance on its life and non-life segments.
Non-life insurance is expected to account for 36.4 percent of premiums, ordinary life for 33.2 percent, and group life for 9.6 percent. That balance highlights AIICO’s diversified portfolio in a market where most players lean heavily toward life products.
The company anticipates a sharp improvement in insurance service results, forecasting N11.9 billion, compared with a drag in the prior year. Management expects margins to expand to about 9 percent in FY 2025, from a negative 2.9 percent in 2024, suggesting more sustainable performance as underwriting becomes less reliant on external shocks like currency devaluation.
A major driver of the earnings outlook is investment income, which AIICO pegs at N51.8 billion, largely from bond holdings and financial assets. Including net fair value gains of N20.3 billion, total investment-related income is expected to reach N72.0 billion. This will offset a hefty N56.8 billion in net finance expenses from insurance contracts, leaving a net insurance and investment result of N27.1 billion.
Cash flow, however, looks less rosy. AIICO projects operating inflows of N35.7 billion, but investing outflows of N40.3 billion and financing outflows of N2.6 billion will leave a net decline of N7.2 billion in cash, cutting closing balances to N12.3 billion from N19.4 billion at the start of the year. This indicates continued capital deployment into financial assets and potential liquidity pressures if market conditions tighten.
The adoption of IFRS 17, effective since 2023, also reshapes how insurers recognise revenue and expenses, potentially amplifying volatility but offering a clearer view of underlying profitability.
AIICO emphasised that unlike in 2024 when FX gains of about N11.2 billion inflated bottom-line earnings, 2025 performance will be underpinned by more sustainable operational improvements.
Still, risks remain. For investors, the company’s projection suggests resilience, but with earnings tied significantly to investment swings, execution and asset-liability management will be critical.
AIICO’s guidance underscores the broader trend in Nigeria’s insurance sector: earnings are becoming increasingly shaped by investment strategies rather than just underwriting.
If the company delivers on its 2025 forecast, it will mark a transition from dependence on external shocks to steadier, margin-driven growth.
