Despite Low Market Penetration, 15 Insurance Companies Report N121.78bn PBT in H1 2024

Kayode Tokede

Despite its low market penetration in Nigeria, coupled with other macro-economic challenges, 15 quoted insurance companies listed on the Nigerian Exchange Limited (NGX), generated N121.78 billion Profit Before Tax (PBT), during the half year ended June 30, 2024.

This is about 138.2 per cent increase from N51.1 billion PBT generated by these insurance companies in H1 2023. 

With the recent impressive performance of the insurance companies, the NGX Insurance Index has outperformed the NGX All-Share Index (ASI) and NGX Banking Index.

As of October 2024, the NGX Insurance Index in its Year-till-Date performance, stood at 34.36per cent, while the NGX All-Share Index (ASI) and NGX Banking Index stood at 31.16 per cent and 3.25per cent, respectively.

Extract from the unaudited result and accounts revealed that Cornerstone Insurance Plc, followed by Axam Mansard Insurance Plc and AIICO Insurance Plc were the most profitable listed insurance on NGX, driven by significant increase in gross written premium.

From the unaudited result and accounts for H1 2024, International Energy Insurance Plc is the only insurance company that declared N3.6 billion loss before tax against N743.93 million PBT generated in H1 2023.

In its unaudited H1 2024 results, Cornerstone Insurance posted N29.02 billion profit before tax, a growth of 107.3 per cent from N13.99 billion reported in H1 2023, while Axa Mansard Insurance announced N25.11 billion profit before tax in H1 2024, about 94 per cent increase from N14.76billion reported in H1 2023. 

The impressive growth has placed Cornerstone Insurance among the best performers in the NGX insurance sector in terms of share price performance and second in market capitalisation.

In H1 2024, Cornerstone Insurance reported insurance revenue of N16.947 billion, marking a 76per cent year-on-year (YoY) growth and representing over 65per cent of the full-year revenue for 2023.

In H1 2024, 84 per cent of Cornerstone’s insurance revenue came from its non-life insurance segment, while the group life segment contributed only 12 per cent.

This imbalance indicates the company’s heavy dependence on non-life insurance products for growth.

Historically, in 2023, non-life insurance revenue accounted for 57per cent of total revenue, while life insurance contributed 20 per cent.

As AIICO Insurance declared N14.38billion profit before tax in H1 2024, up 98 per cent from N7.25 billion in H1 2023, NEM Insurance reported N12.22 billion profit before tax in H1 2024, which is a growth of 211 per cent from N3.9 billion reported in H1 2023.

Despite challenges posed by the macro-economic environment, THISDAY can report that, the 15 insurance companies generated N107.16 billion profit in H1 2024, representing an increase of 151per cent from N42.7billion reported in H1 2023. 

In terms of profit, Cornerstone Insurance also led others with N27.87 billion profit after tax in H1 2024, a growth of 184.4 per cent from N9.8 billion in H1 2023, followed by Axa Mansard Insurance that declared N25.12 billion profit after tax, an increase of 91.4 per cent from N13.12billion recorded in H1 2023.

The fluctuation of the naira impacted foreign exchange availability in the economy, causing the exchange rate to rise both in the official and parallel markets.

The Central Bank of Nigeria (CBN) raised the interest rate from 18.75 per cent to 26.75 per cent between July 2023 and July 2024 to rein in inflation and stabilise the naira.

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

“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 in Nigeria 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 was purely market dynamics, stressing that, though penetration may be weak, some of these companies are introducing products and services to drive top-line.

The number of insurance companies licensed to operate in Nigeria, grew to 67 from the initial 54, according to latest figures NAICOM had declared in 2023.

According to Nigeria’s Gross Domestic Product (GDP) Q2’24 report, the financial and insurance sector recorded a 6.57 per cent increase in the second quarter of 2024 compared to 5.26 percentage points in the 2023 second quarter.

The finance and insurance sector consists of two subsectors: Financial Institutions and insurance, in which the former accounted for 91.89 per cent and the latter 8.11 per cent of the sector respectively in real terms in Q2 2024.

“Growth in the sector in real terms totalled 28.79 per cent, higher by 1.95 per cent points from the rate recorded in the 2023 second quarter and lower by 2.44 per cent points from the rate recorded in the preceding quarter,” data from the National Bureau of Statistics (NBS) disclosed.