FX Hangover Hits Insurers: Profits Crash 34% to ₦108.4bn Despite Revenue Growth
Nigeria’s insurance industry experienced a sharp profit decline in 2025, even though revenues increased significantly.
Here’s what really happened:
1. Profit Fell Sharply
• Combined Profit After Tax (PAT) of 17 listed insurers dropped 34%
• From ₦165.33bn in 2024
• To ₦108.38bn in 2025
That’s a major reversal.
Why? Because 2024 was an exceptional year driven by FX gains from naira devaluation.
2025 became what analysts are calling a “normalisation year.”
2. The Real Culprit: FX Reversal
In 2024, many insurers made huge profits from:
• Revaluation gains on foreign currency assets
In 2025:
• Those FX gains disappeared
• Some even turned into losses
Major FX Swings:
• Cornerstone Insurance
• ₦30.83bn FX gain ➝ ₦3.58bn FX loss
• Profit fell 68%
• AIICO
• ₦11.17bn gain ➝ ₦2.81bn loss
• AXA Mansard
• ₦26.92bn gain ➝ ₦855.86m loss
• Veritas Kapital
• ₦5.09bn gain ➝ ₦596m loss
Across the board, FX gains evaporated.
3. Revenue Actually Grew
Here’s the interesting part:
Total insurance revenue rose 29.8%
From ₦694.34bn ➝ ₦901.47bn
So business activity increased — but profits still fell.
Top Revenue Leaders:
• AXA Mansard – ₦160.56bn
• NEM Insurance – ₦146.17bn (fastest growth, +51%)
• AIICO – ₦137.66bn
These three alone contributed about 49% of total industry revenue.
4. Rising Claims & Expenses Squeezed Margins
It wasn’t only FX.
• Insurance service expenses rose
• Claims payments increased
• Investment income dropped
Examples:
• LASACO moved from ₦1.52bn profit to ₦3.07bn loss
• Regency Alliance swung from profit to loss
• Prestige Assurance profit dropped 81%
• International Energy Insurance profit fell 81%
So underwriting margins were under pressure.
5. A Few Companies Bucked the Trend
Not everyone suffered:
• Mutual Benefits Assurance PAT grew 84% to ₦20.88bn
• AIICO still grew PAT 18% despite FX losses
• Veritas Kapital turned a ₦1.09bn loss into ₦6.46bn profit
• Universal Insurance grew profit 131%
But overall, the sector narrative was contraction.
Big Picture: What This Means
2025 shows:
• Earnings are returning to core underwriting reality
• FX windfalls are no longer boosting profits
• Sustainability now depends on:
• Better risk pricing
• Expense control
• Investment discipline
• Stronger underwriting margins
It’s a shift from “currency-driven profits” to “operational efficiency-driven profits.”
What to Watch in 2026
• Can insurers maintain revenue growth?
• Will underwriting margins improve?
• How will they meet new capital thresholds under the Insurance Reform Act 2025?
• Will FX remain stable or volatile?
Bottom Line for Investors
Revenue growth alone is not enough.
Profit quality now matters more than ever.
2025 wasn’t a collapse year — it was a recalibration year.
Nigeria’s insurance industry experienced a sharp profit decline in 2025, even though revenues increased significantly.
Here’s what really happened:
1. Profit Fell Sharply
• Combined Profit After Tax (PAT) of 17 listed insurers dropped 34%
• From ₦165.33bn in 2024
• To ₦108.38bn in 2025
That’s a major reversal.
Why? Because 2024 was an exceptional year driven by FX gains from naira devaluation.
2025 became what analysts are calling a “normalisation year.”
2. The Real Culprit: FX Reversal
In 2024, many insurers made huge profits from:
• Revaluation gains on foreign currency assets
In 2025:
• Those FX gains disappeared
• Some even turned into losses
Major FX Swings:
• Cornerstone Insurance
• ₦30.83bn FX gain ➝ ₦3.58bn FX loss
• Profit fell 68%
• AIICO
• ₦11.17bn gain ➝ ₦2.81bn loss
• AXA Mansard
• ₦26.92bn gain ➝ ₦855.86m loss
• Veritas Kapital
• ₦5.09bn gain ➝ ₦596m loss
Across the board, FX gains evaporated.
3. Revenue Actually Grew
Here’s the interesting part:
Total insurance revenue rose 29.8%
From ₦694.34bn ➝ ₦901.47bn
So business activity increased — but profits still fell.
Top Revenue Leaders:
• AXA Mansard – ₦160.56bn
• NEM Insurance – ₦146.17bn (fastest growth, +51%)
• AIICO – ₦137.66bn
These three alone contributed about 49% of total industry revenue.
4. Rising Claims & Expenses Squeezed Margins
It wasn’t only FX.
• Insurance service expenses rose
• Claims payments increased
• Investment income dropped
Examples:
• LASACO moved from ₦1.52bn profit to ₦3.07bn loss
• Regency Alliance swung from profit to loss
• Prestige Assurance profit dropped 81%
• International Energy Insurance profit fell 81%
So underwriting margins were under pressure.
5. A Few Companies Bucked the Trend
Not everyone suffered:
• Mutual Benefits Assurance PAT grew 84% to ₦20.88bn
• AIICO still grew PAT 18% despite FX losses
• Veritas Kapital turned a ₦1.09bn loss into ₦6.46bn profit
• Universal Insurance grew profit 131%
But overall, the sector narrative was contraction.
Big Picture: What This Means
2025 shows:
• Earnings are returning to core underwriting reality
• FX windfalls are no longer boosting profits
• Sustainability now depends on:
• Better risk pricing
• Expense control
• Investment discipline
• Stronger underwriting margins
It’s a shift from “currency-driven profits” to “operational efficiency-driven profits.”
What to Watch in 2026
• Can insurers maintain revenue growth?
• Will underwriting margins improve?
• How will they meet new capital thresholds under the Insurance Reform Act 2025?
• Will FX remain stable or volatile?
Bottom Line for Investors
Revenue growth alone is not enough.
Profit quality now matters more than ever.
2025 wasn’t a collapse year — it was a recalibration year.
