Mutual Benefits, AIICO, Royal Exchange Rally as Investors Buy Insurance Stocks

Insurance Stocks led the rally in equities in trading last week as investors bought into President Bola Tinubu’s reform of the sector.

The NGX Insurance Index rose 41% week on week, led by gains in Mutual Benefits up +60.44%, AIICO Insurance up +59.82% and Royal Exchange Insurance up +59.33% all in just one week.

The NGX All-Share Index (NGX-ASI) rose by +5.07% week on week (WoW) to 145,756.09 points by comparison, lifting the Year to Date return to +41.61%.

“This strong performance was supported by sustained demand for fundamentally sound stocks following earnings releases and a sharp rally in insurance counters, driven by the passage of the Nigerian Insurance Industry Reform Act 2025,” analysts at Meristem Securities said.

To be sure most of the insurance stocks are small caps and rallying off a low base. For instance Mutual Benefits has a market capitalisation of N58.58 billion, AIICO Insurance is valued at N128 billion, while Royal Exchange Plc has a market capitalisation of N19.75 billion.

That compares to tier-one bank stocks which trade close to N1 trillion and above in market cap, which would explain the need for the reforms of the Insurance sector.

The Nigerian Insurance Industry Reform Bill, 2025, signed by President Bola Ahmed Tinubu, mandates a substantial increase in minimum capital requirements, with the minimum for Composite Insurers set at N25.0 billion up 400% from the previous N5.0 billion levels.

Other new minimum capital thresholds are: Life Insurance: N10.0 billion from N2.0 billion previously, Non-life Insurance: N15.0 billion from N3.0 billion previously, and Reinsurance: N35.0 billion from N10.0 billion, previously.

Insurers would be required to comply with the new capital requirements within 12 months of the law’s commencement, as stipulated by the National Assembly.

“The reform is expected to boost investor confidence, attract new entrants, particularly foreign investors and enhance consumer trust through stronger policyholder protection mechanisms. Looking ahead, the law is expected to stimulate innovation in insurance products, drive deeper market penetration, and support the broader goal of financial inclusion,” Meristem Securities analysts said in their weekly update.