16 Insurance Stocks’ Market Cap Up 132% to N504.08bn on Reforms, Earnings

Kayode Tokede

Following Investors’ demand for insurance stocks despite inflation and high interest rates, the market capitalisation of 16 insurance companies listed on the Nigerian Exchange Limited (NGX) reached N504.08billion at the end of 2024, about 132 per cent increase when compared to N217.5 billion in 2023.

The key reforms in the insurance sector, and impressive corporate earnings declared by these firms resulted in the huge demand by investors during the period under review.

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 Part of these reforms include: the Nigeria Insurance Industry Reform Bill, 2024 aimed to consolidate outdated laws to provide a more robust regulatory environment, increased capital requirements, focus on deepening penetration, and claims management and consumer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

With a strong year-to-date performance above 100 per cent in 2024, the NGX insurance Index outperformed the overall market performance in 2024.

While the NGX All-Share Index gained 37.65 per cent to close 2024 at 102,926.40 basis points, the NGX Insurance Index appreciated by 123.22 per cent to close 2024 at 718 basis points from 321.66 basis points the stock market opened for trading. 

The first quarter saw steady gains, with January and March closing positively; however, February experienced a minor dip. Notably, the index soared to a peak of 405 basis points in March.

Uncertainty stemming from the Central Bank of Nigeria (CBN) recapitalization policy led to a downturn in April, negatively impacting the All-Share Index. From April to July, the index experienced stagnation, losing 10 per cent of its points.

In the latter half of the year, positive sentiment returned to the financial services sector, driving the insurance index to close in the green for five consecutive months.

December marked a highlight, with the index surging 47per cent month-to-date and decisively closing at 718 points.

In 2024, the insurance index emerged as a significant player, demonstrating resilience and growth throughout the year.

Among the five primary sectors on the Nigerian Exchange, it attained the distinction of being the second-best performer, closely following the Oil and Gas sector, which achieved a noteworthy year-to-date performance of 160%.

In contrast, the Industrial goods sector realized a more modest gain of 31.70per cent, while the Consumer goods and Banking sectors recorded performances of 27.56per cent and 21.13per cent, respectively.

According to a THISDAY analysis, the impressive market capitalisation rise was driven by six standout stocks: AIICO Insurance Plc, Axamansard Insurance Plc, Cornerstone Insurance Plc, Coronation Insurance Plc, NEM Insurance Plc and Sunu Assurances Nigeria Plc.

The firms contributed about N362.92 billion out of the N504.08billion overall insurance sector market amid significant increase in stock price in 2024.  

Specifically, Axamansard Insurance led the chart with the largest market capitalisation among listed insurance company at N73.8billion as of 2024 ending from N49.5 billion in 2023. Its stock price appreciated by 49 per cent to close 2024 at N8.20 per share from N5.50 per share it closed for trading in 2023. 

It was closely followed by Cornerstone Insurance with N65.4billion market capitalisation as of close of business activities in 2024 from N25.43billion in 2023 as its stock price appreciated significantly by 157 per cent to close 2024 at N3.60 per share from N1.40 per share.

In nine months of 2024, Axamansard Insurance had generated N98.2 billion 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.

In term of profit, Again, Axamansard Insurance reported the highest profit before tax in the period under review, followed by Cornerstone Insurance.

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

In addition, Sunu Assurances Nigeria saw it market capitalisation at N62.47billion in 2024 from N6.39 billion in 2023, following a significant 877.27 per cent increase in its stock price from N1.10 per share in 2023 to N10.75 per share it closed 2024.

The Central Bank of Nigeria raised interest rate from 18.75 per cent to 27.5 per cent between January  and November 2024 to rein in inflation and stabilise the naira.

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 may be weak, some companies are introducing products and services to drive top-line.

The Chief Executive Officer, Highcap Securities Limited, Mr. David Adnori stated that the 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 hit 67 from 54, according to latest figures obtained from the NAICOM, had declared in 2023.

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 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,” said the National Bureau of Statistics (NBS).