Nigeria’s top insurance companies are currently experiencing their most profitable period in over a decade, as a mix of rising interest rates, regulatory enforcement, and strategic investment choices propel their earnings to record levels. A recent Nairametrics review of the financials of six leading insurers — AIICO Insurance, NEM Insurance, Custodian Investment Plc, AXA Mansard, Leadway Assurance, and Cornerstone Insurance — showed that their combined profits before tax surged from just N36 billion in 2019 to nearly N233 billion in 2024.
This growth represents more than a sixfold increase within five years, making insurance one of the fastest-growing sectors in Nigeria’s fragile economy. The profit jump is largely driven by investment income, benefiting from Nigeria’s high-interest rate environment. Insurers, who typically allocate a large portion of their capital to fixed-income securities, have reaped the benefits of increased yields on government treasury bills and bonds.
Another key factor contributing to the sector’s profitability is the enforcement of the “No Premium, No Cover” policy by the National Insurance Commission (NAICOM). This regulation mandates that insurance coverage only becomes effective after the premium is paid in full, reducing cases of defaults and improving liquidity across the industry. This has strengthened the cash flow positions of most insurers and helped clean up their balance sheets.
Among the top performers, NEM Insurance has emerged as the breakout star, growing its profits nearly twentyfold in the past five years, driven by both strong core insurance operations and rising investment returns. Custodian Investment Plc, with its diversified interests across insurance and pension administration, has also delivered robust growth, leveraging its size and financial strength.
Cornerstone Insurance has posted impressive numbers, largely aided by foreign exchange gains and investment performance, even though its core insurance activities are less dominant. AXA Mansard, another major player, has opted for a measured and steady growth path, maintaining a consistent financial trajectory.
AIICO Insurance stands out for recording its highest-ever profit in 2024, though the bulk of this achievement came from investment income rather than core insurance activities, which still posted a loss. This exposes AIICO’s future performance to market dynamics such as fluctuating interest rates and foreign exchange movements.
Leadway Assurance, the only unlisted company in the group, boasts the strongest balance sheet. Its total assets grew from N394.8 billion in 2019 to over N1.025 trillion in 2024, making it the largest among the reviewed companies. Leadway also saw its profit before tax rise to N73.6 billion from N11.3 billion five years ago, confirming its position as one of Nigeria’s most profitable insurers.
Despite these impressive figures, the insurance industry remains relatively small when compared to Nigeria’s banking and fintech sectors. For instance, Access Holdings, the country’s largest bank by assets, has a larger asset base than the entire listed insurance sector combined. Additionally, there is no insurance company among Nigeria’s SWOOTs — Stocks Worthy of Long-Term Investment — which include the most valuable and investor-attractive firms on the Nigerian Exchange.
The sector also lacks representation on the NGX30, which lists Nigeria’s 30 most valuable companies by market capitalization. This reflects the generally low investor sentiment towards insurance stocks compared to banks, industrial firms, and telecommunications companies.
The competitive threats facing the insurance industry are intensifying. Nigerian banks, bolstered by the Central Bank of Nigeria’s new recapitalization mandate, are looking to diversify their income sources, with insurance emerging as an attractive target. With better technology, stronger customer bases, and superior capital, some banks are already quietly entering the insurance space.
Similarly, fintech companies, known for their agility and tech-driven approaches, are encroaching with innovative microinsurance products, embedded policies, and seamless digital experiences. These offerings appeal to younger, tech-savvy consumers and present stiff competition to traditional insurers, who often struggle with technology adoption and customer engagement.
For Nigeria’s insurance industry, the challenge is clear: recapitalize, scale up, and embrace digital transformation or risk being overtaken by more agile players in the financial services sector. Without sufficient capital, technological innovation, or broader market penetration, many insurers may find it difficult to stay competitive.
Nonetheless, the short-term outlook remains positive. As the Nigerian economy grows, so does the demand for various insurance products — from life and health insurance to property and business coverage. Revenues are on the rise, investment income continues to flow, and profits are hitting historic highs.
For investors, the current dynamics present a unique opportunity. While the insurance sector remains small and structurally underdeveloped compared to other segments of Nigeria’s financial services industry, its current growth trajectory and valuation levels suggest that it could be an underdog worth watching in the coming years.
