Nigeria’s top-listed insurance firms are experiencing their most profitable run in over a decade, driven by a convergence of rising interest rates, tighter regulatory enforcement, and strategic investment decisions.
A Nairametrics analysis of six major insurers—AIICO, NEM Insurance, Custodian, AXA Mansard, Leadway Assurance, and Cornerstone Insurance—reveals a dramatic rise in combined pre-tax profits, soaring from N36 billion in 2019 to nearly N233 billion in 2024. This more than sixfold increase outpaces the growth rate of most sectors in Nigeria’s fragile economy.
Interest Income Fuels Profit Surge
The earnings boom is being powered not only by core insurance operations but significantly by investment income. Nigeria’s high-interest rate environment has elevated returns on fixed-income securities, a favored asset class for insurers. With treasury yields climbing, investment portfolios have become a major engine of profitability.
In addition, regulatory enforcement has played a pivotal role. The consistent application of the “No Premium, No Cover” policy—requiring premiums to be paid before coverage commences—has boosted liquidity and reduced defaults, strengthening insurers’ balance sheets.
NEM, Custodian, Leadway Among Standouts
Among the standout performers is NEM Insurance, whose profit has grown nearly twentyfold over five years, driven by robust gains in both underwriting and investment returns.
Custodian has also delivered solid growth, leveraging its broader footprint in insurance and pensions. Its scale and investment discipline have allowed it to weather market volatility while expanding earnings.
Cornerstone Insurance, with a stronger reliance on foreign exchange and capital market gains, has also posted impressive headline figures. AXA Mansard has opted for a more measured and steadier path, emphasizing consistent growth over spikes in performance.
AIICO Insurance made headlines for posting its highest-ever profit in 2024, though this was largely fueled by investment returns. Its core underwriting operations ran at a loss, raising concerns about future profitability in the face of market fluctuations in interest or exchange rates.
Leadway Assurance, the only unlisted firm in the group, remains a powerhouse. Its balance sheet has more than doubled from N394.8 billion in 2019 to over N1.025 trillion in 2024. With pre-tax profits rising to N73.6 billion, Leadway is now not only the largest by assets but also one of the most profitable.
Challenges Remain: A Sector Still in the Shadows
Despite these gains, Nigeria’s insurance sector remains dwarfed by its financial services peers. The industry’s market capitalization lags well behind banks, telcos, and industrial giants. Notably, no insurer features on the NGX30, the index of Nigeria’s 30 most valuable listed companies. None are considered part of the SWOOTs—Stocks Worthy of Long-Term Investment—a signal of cautious investor sentiment.
The disparity is glaring Access Holdings, Nigeria’s largest bank by assets, is larger than the entire listed insurance industry combined.
Rising Competition from Banks and Fintechs
With Nigerian banks raising capital under the CBN’s new recapitalization mandate, many are eyeing expansion into new sectors—including insurance. Backed by superior technology, strong customer bases, and deeper pockets, banks are beginning to quietly enter the insurance space.
Fintechs, too, are making inroads, offering microinsurance, embedded products, and digital-first experiences that appeal to younger, underserved markets. Traditional insurers, many burdened by legacy systems and limited capital, may struggle to keep pace.
A Sector at a Crossroads
The insurance industry now stands at a turning point. To remain competitive and relevant, especially in an increasingly digital economy, it must recapitalize and embrace innovation—or risk being leapfrogged.
Still, in the near term, the outlook remains bright. Revenues are rising, investment income is flowing, and broader economic recovery is stoking demand across segments—from life and health to property and business coverage.
The Underdog Opportunity
For investors, the message is clear: while the sector remains structurally underdeveloped, current valuations and growth rates present a compelling opportunity. Nigeria’s insurance industry may still be playing catch-up, but for now, it is quietly booming—and potentially poised for a breakout.
