Despite Economic Challenges, 17 Insurance Firms’ Profit Up 238% to N98.33bn

Kayode Tokede

The stellar peformance recorded by players in the financial service sector in 2023 despite economic upheavals extended to the insurance sector as 17 insurance companies listed on the Nigerian Exchange Limited (NGX) generated N98.33 billion profit before tax (PBT) in 2023, a 238 per cent increase from N29.07 billion reported in the 2022 financial year.

However, the companies have not announced their audited result and accounts for the period ended December 31, 2023 to the investing public, contributing to delayed dividend payout to shareholders and dwindling insurance index performance on NGX.

But most of the companies have written to NGX on delayed audited accounts, citing challenges associated with the implementation of the International Financial Reporting Standard 17 which require several changes in the disclosure methods.

The deadline for filing audited December 31, 2023 was at March 31, 2024, the National Insurance Commission (NAICOM) has obtained, a general approval for an extension of the time for submission of the accounts on behalf of the insurance companies.

Specifically, the NGX Insurance Index has dropped Month-till-Date (MtD) to 5.99 per cent as of April 19, 2024 as most paying dividend insurance companies recorded significant profit-taking on the bourse.

Analysis of the underwriting firms’ results showed that NEM Insurance, Cornerstone Insurance, and Axamansard Insurance Plc reported significant increase in PBT amid significant increase gross written premium.

Coronation Insurance Plc and Guinea Insurance Plc were the only two insurance companies that migrated from losses in 2022 to profitability in 2023.

In its unaudited 2023 results, NEM Insurance posted N20.79 billion profit before tax, a growth of 252 per cent from N5.9 billion reported in 2022 financial year, while profit reached N18.5 billion in 2023, an increase of 252 per cent from N5.25 billion declared in 2022.

The growth in NEM Insurance PBT and profit is on the backdrop of N62.95 billion gross written premium in unaudited 2023 financial year, representing nearly 89 per cent from N33.4 billion reported in 2022 and N10.78 billion foreign exchange gain in 2023 from N296.74million declared in 2022.

Meanwhile, Cornerstone Insurance, declared N18.05 billion PBT in 2023, a growth of 518 per cent from N2.92 billion in 2022, while Axamansard Insurance in 2023 declared N17.9 billion PBT in 2023 unaudited, representing a significant increase of 402 per cent from N3.6 billion in 2022. 

Despite challenges posed by the macroeconomic environment, the 17 insurance companies declared N84.11 billion profit in 2023, a significant increase of 216 per cent compared to N26.63 billion in 2022.

In terms of profit, NEM Insurance also led others with N18.5 billion profit after tax in 2023, a growth of 252 per cent from N5.25 billion in 2022, followed by Cornerstone Insurance that declared N15.7 billon profit after tax, an increase of 516 per cent from N2.54billion recorded in 2022.

The Chief Executive Officer, Highcap Securities Limited, Mr. David Adnori expressed that these insurance companies should take pride in their achievements and resilience displayed amidst the rapidly changing macro environment in 2023.

“Last year Nigeria recorded a prevailing economic landscape, market and inflationary trends influence customer spending leading to shifts in consumer demand. Despite challenges posed by the macroeconomic environment and supply constraints, these listed insurance companies delivered strong performance, maintaining a disciplined approach to strategic investments for the future hence upholding the strength of our balance sheet,” he said.

He added that insurance sector over the years in Nigeria remained a hard sell despite significant changes and advancements.

“However, embedded insurance holds the potential to address these challenges by integrating insurance products with existing services and increasing awareness, accessibility, and trust in the insurance sector,” Adnori said.

On his part, the Chief Operating Officer of InvestData Consulting Limited, Mr. Ambrose Omordion noted that the insurance sector performance on the NGX is purely market dynamics, stressing that, though penetration maybe weak, a little off these companies are introducing products and services to drive top-line.

The number of insurance companies licensed to operate in Nigeria reached 67 from 54, according to latest figures obtained from NAICOM.

According to National Bureau of Statistics (NBS), “Growth in this sector in real terms   totalled 29.78 per cent, higher by 18.16 percentage points from the rate recorded in the 2022 fourth quarter and higher by 1.56 percentage points from the rate recorded in the preceding quarter. Quarter-on-quarter growth in real terms stood at 27.30 per cent.

“On an annual basis, the sector grew by 26.53 per cent, higher than 16.36 per cent in 2022. The contribution of Finance and Insurance to real GDP totalled 4.95 per cent, higher than the contribution of 3.95 per cent recorded in the fourth quarter of 2022 by one percentage points, and higher than 4.36per cent recorded in Q3 2023 by 0.60percentage points.”