Investors punish Nigerian insurance stocks even as profits surge
In general, the Insurance Index fell 5.52% in October and is down 13.64% year to date, the only major sector index in negative territory. Over the same period, the banking index had gained 60% and the oil-and-gas index 128%. The All-Share Index was up 60%. The post Investors punish Nigerian insurance stocks even as profits surge appeared first on Nairametrics .
Nigerian insurance stocks have faced investor punishment despite strong profit growth in the third quarter. AIICO Insurance Plc, for example, reported a 27% increase in pre-tax profit to N19.4 billion, while AXA Mansard Insurance Plc saw its profit after tax surge 81% to N10.9 billion. Despite these impressive numbers, investor sentiment has been muted, with several major players witnessing a decline in share prices.
This disconnect between strong earnings and falling share prices has left insurers among the cheapest stocks on the Nigerian Exchange, and raised questions about whether the market is mispricing the sector. The Insurance Index, which had previously beaten the broader market in 2025, has seen a significant decline of 13.64% year to date.
Analysts suggest there are three main reasons behind the disparity: dilution resulting from new capital raises, the quality of earnings being primarily from investment portfolios rather than underwriting, and cash flow issues. Despite these challenges, some insurers, such as Custodian, have seen their shares rise significantly, while others, including Fortis Global Insurance Plc, continue to post impressive profit growth but remain loss-making.
Investors are closely monitoring dividends and cash flow trends to determine if these issues will narrow the valuation gap.
Written by urgent.news from Nairametrics's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
