Two Engines, One Drag
NEM's profit growth did not come from selling much more insurance. Revenue rose 7.7%, a modest pace, but the underwriting engine became more efficient: insurance service expenses fell 6.2% to ₦63.49 billion even as the book grew, lifting the service result by 22.1% to ₦20.81 billion. The second engine was the investment portfolio, where fair value gains of ₦12.70 billion, almost double the ₦6.55 billion recorded a year earlier, pushed the net investment result to ₦19.03 billion.
The drag sat in two places. Reinsurance costs jumped 38.1% to ₦31.39 billion, growing five times faster than revenue, which suggests NEM paid considerably more to lay off risk in 2026. Foreign exchange losses also widened to ₦3.61 billion from ₦974.5 million, a reminder that the investment result contains offsetting currency exposure alongside the fair value gains.
The Cash Flow Statement Tells a Different Story
The clearest weakness in the result is cash conversion. Operating cash flow swung from an inflow of ₦10.35 billion in the first nine months of 2025 to an outflow of ₦1.06 billion, even as reported profit rose by almost a third. Premium receipts fell 7.9% to ₦112.54 billion while direct claims paid rose 29.1% to ₦39.43 billion and management expenses paid nearly doubled to ₦14.40 billion. Total cash fell ₦15.36 billion during the period, although the closing balance of ₦12.25 billion remained above the ₦8.06 billion held a year earlier.
Some of that gap is timing, since premiums written and premiums collected rarely move together quarter by quarter. The claims line is harder to dismiss: a 29.1% rise in claims paid against 7.7% revenue growth is the trend that decides whether the improved service result survives into the full year.
A Bigger Balance Sheet Carrying the Argument
Total assets of ₦204.22 billion and equity of ₦103.26 billion mean NEM now funds roughly half its balance sheet with shareholders' money, a comfortable position for an insurer heading into the sector's recapitalisation timetable, with financial investments of about ₦128.07 billion doing most of the earnings work. The investment portfolio delivered this result, and it also concentrates the risk: if fair value gains normalise in the fourth quarter while claims keep rising at the current pace, the 30.5% profit growth rate will be difficult to defend on underwriting alone.
