…AIICO expects to report profit before tax of N16.5 billion and profit after tax of N14.4 billion for the nine-month period, implying an effective tax charge of about N2.1 billion.
THUR JUNE 11 2026-theGBJournal| AIICO Insurance Plc projects a sharp improvement in earnings through the first nine months of 2026, driven by higher insurance service income, stronger underwriting profitability and robust investment returns from fixed-income securities.
The projection underscores the insurer’s strategy of relying more on core operations rather than one-off market gains.
According to the company’s earnings forecast for the nine months ending September 30, 2026 published today, gross written premium (GWP) is expected to rise to N168.7 billion, while insurance revenue is projected at N122.1 billion, reflecting continued expansion across its life and non-life franchises.
The forecast points to a business mix that remains broadly diversified. The non-life segment is expected to contribute 36.7% of total premiums, marginally ahead of the ordinary life business at 36.6%, while group life insurance is forecast to account for 13.4%.
The balance is expected to come from other insurance operations.
The outlook suggests AIICO is positioning itself to benefit from rising insurance penetration, corporate risk management demand and growing life insurance adoption amid Nigeria’s evolving economic landscape.
Profitability Supported by Core Insurance Operations
AIICO expects to report profit before tax of N16.5 billion and profit after tax of N14.4 billion for the nine-month period, implying an effective tax charge of about N2.1 billion.
More significant than the headline profit figure is the expected improvement in underwriting quality. Management projects insurance service results—an important measure of profitability under IFRS 17—to increase by 55.9% compared with 2025 levels.
The company expects insurance service margins to improve to approximately 10.9%, up from 8.6% recorded in 2025.
The increase signals stronger pricing discipline, improved risk selection and tighter claims management, all of which are critical indicators for long-term earnings sustainability.
In its outlook statement, management emphasized that future profitability would increasingly be driven by recurring insurance operations rather than external market factors.
“We expect insurance service results to increase 55.9% over 2025, pointing to more sustainable performance resilient to exogenous shocks,” the company said. We expect the underlying, sustainable business performance to drive profitability,” AIICO management said.
The projected margin expansion is particularly noteworthy given persistent inflationary pressures and elevated claims costs across parts of Nigeria’s insurance market.
Investment Portfolio Remains a Key Earnings Pillar
Alongside underwriting improvements, AIICO expects investment income to remain a major contributor to earnings.
The insurer said returns will be driven largely by its holdings in government bonds and other financial assets. With domestic interest rates remaining elevated and yields on fixed-income securities still attractive by historical standards, insurers with large investment portfolios continue to benefit from higher reinvestment income.
However, management cautioned that fair-value movements on financial assets could vary depending on market conditions. Non-cash items expected to affect reported earnings include depreciation of non-current assets, amortization of intangible assets and fair-value gains or losses on financial instruments.
These accounting adjustments may introduce volatility into reported profits even as underlying operating performance strengthens.
FX Pressure Eases
A notable tailwind for 2026 earnings is the absence of the sizeable foreign-exchange losses that weighed on prior-year results.
The company disclosed that profits in 2025 were negatively affected by approximately N1.4 billion in foreign-exchange losses resulting from naira appreciation.
With currency markets appearing relatively more stable, AIICO’s earnings outlook suggests reduced exposure to such valuation shocks.
The improvement highlights a broader trend among Nigerian financial institutions, many of which experienced significant earnings volatility during periods of rapid exchange-rate adjustment.
Cash Flow Signals Heavy Investment Deployment
Despite projected profitability, AIICO expects cash balances to decline during the period as funds are deployed into investments and financing obligations.
Net cash generated from operating activities is forecast at N33.9 billion, reflecting the strength of premium collections and operating performance.
However, the company expects to spend N33.8 billion on investing activities, indicating continued allocation of capital into financial assets and portfolio expansion. Financing activities are projected to consume an additional N4.4 billion.
As a result, AIICO forecasts a net reduction in cash and cash equivalents of approximately N4.2 billion, with cash balances declining from N35.0 billion at the start of the period to N28.6 billion by September 2026.
The company also expects a negative foreign-exchange translation impact of about N2.1 billion on cash holdings.
Outlook
The forecast suggests AIICO is entering 2026 from a position of improving operational strength.
While investment income remains an important earnings driver, the projected rise in insurance service margins and underwriting profitability indicates the insurer is becoming less dependent on market-related gains and more reliant on core insurance activities.
For investors, the key takeaway is that AIICO’s expected earnings growth appears increasingly rooted in recurring business fundamentals—a development that could support more resilient profitability even if financial markets become less favorable in the months ahead.
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