Universal Insurance profits plunge as claims surge and capital deadline nears
Universal Insurance reported a sharp drop in profit for last year, with post-tax earnings of N867.9 million—nearly half of the N1.7 billion recorded in 2024. The decline was driven by insurance service expenses more than doubling to N8.3 billion, largely due to massive claims in its fire insurance business, which outpaced a 47% rise in insurance revenue.
The results come as Universal Insurance and other Nigerian insurers race to meet new capital requirements under the Insurance Industry Reform Act 2025, which mandates non-life insurers to boost core capital to N15 billion by August. The company recently launched a rights issue aiming to raise N3.2 billion to help meet this target.
Additional pressures include a swing to N1.6 billion in net insurance finance expenses (from N148.8 million income a year earlier) and a 73% plunge in fair value gains on investment properties, particularly its Rumudumu For Model Estate in Rivers State. However, net income from insurance contracts held turned positive at N2.4 billion, reversing a N413.3 million net expense from the prior year.
Profit before tax fell to N1.1 billion from N1.8 billion, and return on equity declined to 4.7% from 11.4%, despite the company's shares being up 46.8% this year.
With the August deadline looming, will Universal Insurance successfully raise the required capital through its rights issue and other measures, or will it face further strain as it grapples with rising claims costs and investment losses while trying to comply with stricter regulatory demands?