GCR Upgrades AIICO Insurance Financial Strength Ratings
GCR Ratings has upgraded AIICO Insurance Plc’s international and national scale financial strength ratings to B and AA+(NG) from B- and AA(NG), respectively – both ratings were maintained on stable outlooks.
The ratings upgrade reflects the sustained improvement in AIICO Insurance’s liquidity position, GCR said, supported by the substantial liquid assets relative to technical liabilities and short-term obligations.
The ratings also balance the insurer’s strong competitive position, robust risk-adjusted capitalisation and its intermediate earnings assessment.
“We consider AIICO Insurance the core operating entity within the wider AIICO group, comprising the insurer, AIICO Multishield Limited and AIICO Capital Limited. Therefore, the financial strength ratings reflect the strengths and weaknesses of the group”, GCR said.
AIICO Insurance is a leading composite insurer in Nigeria, holding an estimated 10.1% share of the industry’s premium base in 2024, the rating note acknowledged.
GCR said the insurer’s insurance revenue demonstrates consistent growth, supported by a strong brand franchise, an operational track record spanning over six decades, an extensive distribution network, and well-established relationships with intermediaries.
Ratings analysts explained that the insurer’s competitive edge is reinforced by its dominant position in the individual life segment, where it has maintained market leadership with a 13.1% share in 2024.
This segment benefits from a granular and well-diversified policyholder base. The non-life business also reflects healthy diversification, with four business lines each contributing more than 10% of premiums in 2024. Additionally, premiums are well spread across multiple distribution channels, comparing favourably with industry norms.
Looking ahead, GCR said AIICO Insurance plans to drive growth in the short to medium term through market expansion (both product and geographic reach), enhanced digital service delivery, and internal operation optimisation.
While the group intends to grow, ratings analysts explained that its focus remains on profitable opportunities across all business lines, positioning it to sustain its strong market presence.
The group’s earnings profile is noted to remains within the intermediate range of our assessment. In 2024, insurance revenue grew by 49.0% to NGN108.2 billion or USD69.5 million.
However, despite this improvement, underwriting performance remained negative, driven by higher reinsurance cessions and increased insurance service expenses, partly reflecting the impact of naira devaluation and inflationary pressures on claims and other insurance service costs.
AIICO’s investment income continued its upward trend, with yields increasing to 15.9% in 2024 from 14.3% in 2023, supported by FX gains of NGN11.2 billion or USD7.2 million.
Overall, net profit after tax grew by 26.5% to NGN15.2 billion in 2024, although return on revenue and assets remained relatively stable at 20.3% and 1.1%, compared to 22.2% and 1.0% in 2023.
Positively, the insurer demonstrated a strong rebound in earnings between December 2024 and September 2025. During this period, insurance revenue increased by 23.0%, while insurance service expenses remained relatively stable, rising only by 2.2%, resulting in a positive underwriting result of NGN8.6 billion.
Looking ahead, ratings analysts said sustained improvement in underwriting performance and other earnings metrics could strengthen the group’s earnings assessment.
The group’s strong risk-adjusted capitalisation is a key ratings strength, supported by a robust capital base relative to aggregate risk exposures.
As of 31 December 2024, the capital base increased by 30.8% to NGN67.8 billion or USD43.5 million, driven by earnings accretion and a conservative dividend payout ratio of less than 50% during the review period.
Risk exposures also grew at a similar pace during the period and consequently, the GCR capital adequacy ratio (CAR) remained stable at 2.9x in 2024 (2023: 2.8x).
From a regulatory standpoint, the insurer’s statutory solvency margin of 3.2x in 2024 (2023: 3.0x) remains well above the minimum requirement of 1x.
“We expect AIICO Insurance’s capital position to remain strong, with the GCR CAR projected to stay above 2x over the next 12–18 months”.
GCR acknowledge that AIICO liquidity assessment is a positive rating factor. As of 31 December 2024, the group’s total investment portfolio registered at NGN377.7 billion (USD246.1 million), primarily composed of local currency government bonds, which accounted for 80.4% of the portfolio in 2024, up from 78.5% in 2023.
This allocation reflects the premium structure, which is weighted toward long-tail life products and requires alignment with long-term financial assets.
Consequently, cash and stressed financial assets provided strong coverage of net technical liabilities and short-term obligations at 2.0x in 2024.
Banking counterparty risk improved over the period, with the top five banking counterparties accounting for 44.4% of total deposits and placements in 2024, down from 70.3% in 2023. These counterparties maintain good credit profiles.
Looking ahead, ratings analysts expect liquidity coverage to range between 1.7x–2.0x over the outlook period, supported by a stable allocation to relatively liquid instruments and effective matching of the investment pool with the maturity profile of technical reserves.
The stable outlook reflects GCR’s expectation that the group’s business profile will be supported by continued premium growth, which should sustain its current market position.
In addition, ratings analysts anticipate that liquidity and risk-adjusted capital strength will remain strong over the next 12–18 months. Sustained improvement in underwriting performance could strengthen the earnings assessment. MTN Nigeria Sets to Pay Shareholders Interim Dividend
