The insurance sector has emerged as the worst-performing segment of the Nigerian Exchange Limited (NGX) this year, slipping into negative territory and wiping out the gains recorded over the past two years.

The slide may have been caused by a negative investor response to the operators’ poor earnings amid recapitalisation concerns.

Data by the NGX showed that the index posted a year-to-date loss of 1.75 per cent as of June 19, making it the only major sectoral index that is in negative territory.

This poor performance marks a sharp reversal of a positive two-year trend.

In 2024, the insurance index delivered a return of 107.74 per cent, making it the second-best performing sector after oil and gas, which gained 159.81 per cent.

The consumer goods index returned 52.2 per cent, while the all-share index gained 36.59 per cent. The industrial goods and banking indices rose by 31.47 per cent and 21.8 per cent, respectively.

The sector also maintained a strong rally in 2025, outperforming the all-share index and delivering a return of about 79 per cent to shareholders by August of that same year.

However, the trend has reversed significantly this year. The sector stands out as the only sector that has posted a negative capital gain in the year.

Banking, oil and gas, consumer goods, industrial goods and all-share indexes have recorded gains of 35.77 per cent, 111.13 per cent,18.14 per cent, 95.79 per cent and 51.62 per cent, respectively.

Operators attributed the sector’s underperformance to investor concerns over fears of share dilution from planned capital raising, weak earnings growth among some operators and sustained profit-taking because of the strong rally recorded in the previous two years.

They noted that many investors are taking a cautious position ahead of the recapitalisation deadline, with uncertainty over mergers, acquisitions and fresh equity issues impacting negatively on investors’ sentiment.

The operators warned that market sentiment may remain weak in the near term as investors await clarity on capital raising plans and industry consolidation.

However, they expressed optimism that the sector would retain strong long-term potential due to the opportunities expected to emerge after the recapitalisation process is completed.

The poor performance also reflects the financial results of several insurance companies.
For the financial year ended December 31, 2025, NEM Insurance Plc reported a profit before tax of N27.98 billion, representing a 17 per cent decline from N33.7 billion recorded in 2024.

The company attributed the decline largely to rising claims expenses, higher reinsurance costs and weaker investment income.

Similarly, Prestige Assurance Plc recorded a profit before tax of N357.2 million in 2025, down from N3.09 billion posted in 2024. Profit after tax also fell to N28.6 million from N3.24 billion in the previous year.

The company’s first-quarter result for 2026 showed further pressure, with profit after tax declining by seven per cent to N535.57 million from N574.9 million recorded in the corresponding period of 2025.

Gross premium written also fell by 10 per cent to N7.21 billion from N8.02 billion.

For AXA Mansard Insurance Plc, revenue rose by 22 per cent to N160.56 billion for the year ended December 31, 2025. However, profit before tax plunged by 81 per cent to N6.12 billion from N31.69 billion recorded in 2024.

A look at the share price of some companies under the sector showed that Prestige began the year at N1.58 kobo but has since lost 10.8 per cent off that price valuation.

Shareholders’ worries are compounded by the fact that PRESTIGE has lost six per cent of the stock’s value from May 19th to date.

AXA Mansard also began the year at N13.70 and has lost approximately 6.2 per cent, while Sunu Assurances Nigeria Plc has fallen by about 34.4 per cent after opening the year at N5.50 per share.

President of the Independent Shareholders Association of Nigeria (ISAN), Moses Igbrude, said the sector is currently undergoing a critical phase of reforms and recapitalisation, which has influenced the performance of many insurance stocks in the market.

He explained that most operators are focused on raising funds and strengthening their capital base to meet regulatory requirements.

He said this has made them become more cautious in their investment strategies and returns to shareholders in the short term.

Igbrude also noted that while the ongoing recapitalisation exercise may be putting pressure on share prices and investor sentiment, it is expected to position the industry for stronger growth, improved underwriting capacity and enhanced profitability in the future.