Most listed Nigerian insurers are not efficient at turning shareholders’ investment into profit, which underscores the lack of underwriting discipline just as rising claims expenses undermine margins.
Data gathered by MoneyCentral shows the average return on average equity (ROAE) of insurers fell to 18.20 percent in the first six months of 2026 from 20.87 percent as at June 2025.
Of course, sixty percent (60%) of the fifteen companies recorded a decline in returns while some have theirs lower than 3 percent.
Investment returns, which supports profitability, have not been growing as it used to, given the gradual return to a benign interest rates environment as the central bank has paused the hiking of monetary policy rate.
The Central Bank of Nigeria retained the Monetary Policy Rate (MPR) at 26.5% during its last Monetary Policy Committee meeting.
There has also been pressure on profit margin due to spiraling claims expenses as premium growth is failing to keep up to pace with rising operating expenses.
A weak currency means the replacement costs of assets have risen since those assets were indemnified at a lower exchange rate a few years ago before the unification of the foreign exchange market in 2023.
While Nigeria’s annual inflation rate eased for the second month to 15.43 percent in July 2026, the lowest since March, compared to June’s 15.91 percent, it is still below the 6 percent to 9 percent central bank’s target.
The yield on Nigeria 10Y Bond Yield eased to 17.12 percent on August 27, 2026, marking a 0.01 percentage point decrease from the previous session. Over the past month, the yield has fallen by 0.38 points, though it remains 0.12 points higher than a year ago, according to over-the-counter interbank yield quotes for this government bond maturity.
The relative stability in the foreign exchange market is a double-edged sword as significantly reduced exceptional gains helped bolster profitability.
Custodian Investment Plc return on average equity (ROAE) dipped to 31.23 percent in June 2026 from 33.13 percent as at June 2025.
AIICO Insurance ROAE reduced to 25.79 percent in the period under review from 27.94 the previous year.
Mutual Benefit Assurance returns fell to 25.04 percent in June 2-26 from 27.94 as at June 2025.
NEM Insurance ROAE dipped to 40.51 in the period under review from 47.51 percent the previous year.
Cornerstone Insurance ROAE reduced to 13.67 percent in June 2026 from 20.10 percent as at June 2025.
Sovereign Trust Insurance ROAE fell to 7.59 percent in the period under review from 18.75 percent the previous year.
Veritas Insurance and Guinea Insurance recorded negative ROAE of -19.67 percent and 14.05 percent due to operating losses suffered, but both firms are not technically insolvent.
With 50 insurance and reinsurance firms meeting the new capital thresholds set under the Nigerian Insurance Industry Reform Act 2025, there are indications that a strong capital base will attract foreign investment needed to boost sector players’ resilience to underwrite large-scale national risks and support the federal government’s $1 trillion economy target by 2030.
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