Q3: 13 Insurance Firms Generated N418.7bn Revenue Despite Stumpy Penetration

Kayode Tokede

Boosted by renewed focus on reforms despite the low penetration of insurance in Nigeria, 13 insurers generated N418.7billion revenue in the first nine months of 2024, about 147 per cent increase when compared to N247.13 billion reported in nine months of 2023.

Nigeria’s insurance sector is undergoing significant reforms to modernise and enhance its operations. Part of these reforms include: the Nigeria Insurance Industry Reform Bill, 2024 aimed to consolidate outdated laws to provide a more robust regulatory environment, increased capital requirements, focus on deepening penetration, and claims management and consumer protection.

The reforms represent a significant shift, aiming to modernise the industry and increase its contribution to Nigeria’s economic growth. However, the proposed changes require careful implementation to balance industry development with inclusivity and fairness.

The sector continues to struggle with limited market size, double-digit inflation, and currency devaluation, which affect the ability of companies to meet higher capital requirements, among other challenges.

However, analysis of the 13 insurers’ results showed that they generated the revenues from life and Non-Life businesses (Oil & gas, Agriculture, Investment management, Property development and Health Maintenance).

According to the unaudited nine months result and accounts submitted to the Nigerian Exchange Limited (NGX), Axamansard Insurance generated the highest insurance revenue, followed by AIICO Insurance Plc, and NEM Insurance Plc.

In months of 2024, Axamansard Insurance generated N98.2 billion insurance revenue, about 60 per cent increase from N61.3billion reported in nine months of 2023, while AIICO Insurance announced N76.98billion insurance revenue in nine months of 2024, representing a growth of 50.04 per cent from N51.31billion reported in nine months of 2023.

Also, NEM Insurance posted N69.52billion insurance revenue in nine months of 2024, up by 83 per cent from N37.92billion reported in nine months of 2023. 

Further investigation by THISDAY showed that the 13 listed insurance companies on NGX reported N112.5 billion profit before tax, representing an increase of 99.6per cent from N56.35 billion reported in nine months of 2023.

Again, Axamansard Insurance generated thee highest profit before tax in the period under review, followed by Cornerstone Insurance and NEM Insurance Plc.

Axamansard Insurance announced N34.48 billion profit before tax in nine months of 2024, representing 128 per cent increase from N115.1billion in nine months of 2023.

Cornerstone Insurance closed the period under review with N26.59 billion profit before tax, about 57 per cent increase from N16.96billion in corresponding period of 2023, while NEM Insurance announced to investing public N15.71billion profit before tax in nine months of 2024, an increase of 168.51 per cent from N5.85 billion in nine months of 2023.

The impressive performance of listed insurance companies has contributed to the NGX Insurance Index gaining 43.34 per cent in its Year-till-Date performance as of November 15, 2024.

The sector has also faced 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 27.25 per cent between January  and September 2024 to rein in inflation and stabilise the naira.

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

On his part, 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 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.

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

According to Nigeria’s Gross Domestic Product (GDP) Q2 2024 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 this sector in real terms totaled 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.