Nigeria’s insurance industry is recording significant profit growth, but investors are increasingly selling insurance shares, raising questions about the quality and sustainability of the sector’s earnings.
AIICO Insurance Plc reported a 27% increase in nine-month profit before tax to ₦19.4 billion, while its profit after tax reached ₦17.3 billion, exceeding its earlier forecast of ₦14.4 billion. Despite the strong performance, its shares declined 6.6%.
Other insurers also delivered improved results. AXA Mansard Insurance Plc recorded an 81% increase in profit after tax to ₦10.9 billion, while Coronation Insurance Plc reported 71% profit growth. NEM Insurance Plc generated ₦26.8 billion in nine months, surpassing its full-year 2025 earnings.
However, the market has largely ignored the improved results. The NGX Insurance Index declined 5.52% in October and was down 13.64% year-to-date, making it the only major sector index in negative territory.
Investors’ concerns include potential shareholder dilution following the industry’s recapitalisation, heavy reliance on investment income to drive profits and weak cash generation among some insurers.
The market is increasingly looking beyond headline earnings to assess whether companies can sustain profitability, improve cash flows and deliver better shareholder returns.
Full-year financial results expected in early 2027 could provide further evidence of whether the sector’s improved earnings will translate into renewed investor confidence.
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