Rising Costs Cause 49.2% Drop in Universal Insurance's Yearly Profit

Mounting costs in major expense areas led to a big drop in profit for Universal Insurance last year. This information came from their management report released on Tuesday.

The non-life insurer, whose shares have risen by 46.8 percent this year, reported N867.9 million in profit after tax. This is almost half of what they made in 2024, when they recorded N1.7 billion.

Insurance service expenses were the biggest challenge. They more than doubled to N8.3 billion and took away from insurance revenue, which went up by 47 percent. This rise in claims was mainly from their fire insurance business.

Like other Nigerian insurance companies, Universal Insurance is working to increase its equity capital. This is to meet the new minimum standards set by the Nigerian Insurance Industry Reform Act 2025. This law requires life insurers and non-life insurers to increase their core capital five times to N10 billion and N15 billion respectively.

Insurers have until this August to meet these requirements. This is part of a plan by Tinubu's government to make the financial services sector a key driver of growth for an economy that aims to reach $1 trillion in value by 2030.

Last month, Universal Insurance started a rights issue to raise N3.2 billion after shareholders approved the plan earlier this year.

In the period under review, net insurance finance expenses reached N1.6 billion. This was a change from the previous year when they had a net insurance finance income of N148.8 million.

Net investment income fell sharply due to a 73 percent drop in net fair value gain on investment properties. This included the company’s Rumudumu For Model Estate in Rivers State.

One positive note in the results was the N2.4 billion recorded in net income from insurance contracts. This is a turnaround from the N413.3 million net expense from insurance contracts held a year earlier.

Profit before tax was N1.1 billion, down from N1.8 billion the previous year. Return on equity also fell to 4.7 percent from 11.4 percent.