Universal Insurance Plc experienced a sharp 49.2% decline in its annual profit, reporting N867.9 million in post-tax earnings for the last year. This figure is nearly half the N1.7 billion recorded in 2024, according to its management report released on Tuesday.
The significant drop was primarily driven by mounting costs across key expenditure categories. Insurance service expenses were a major pressure point, more than doubling to N8.3 billion, which crowded out a 47% rise in insurance revenue.
This surge in expenses was largely attributed to the settlement of substantial claims within its fire insurance business. The non-life underwriter's shares have seen a 46.8% increase this year despite the profit decline.
Like other Nigerian insurers, Universal Insurance is working to meet the new minimum equity capital requirements stipulated by the Nigerian Insurance Industry Reform Act 2025. This act mandates underwriters operating life insurance business to scale up core capital fivefold to N10 billion, and non-life insurance counterparts to N15 billion.
Insurers face a deadline of this August to fulfill these requirements, part of the Tinubu administration's strategic push to position the broader financial services sector as a pivot for an economy expected to reach $1 trillion in valuation by 2030. Universal Insurance launched a rights issue last month to bolster its capital.
In the period under review, net insurance finance expenses amounted to N1.6 billion, a stark contrast to the net insurance finance income of N148.8 million posted a year earlier. Net investment income also took a hit from a 73% plunge in net fair value gain on investment properties, particularly affecting the company’s Rumudumu For Model Estate in Rivers State.
A notable positive in the results was the N2.4 billion recorded in net income insurance contracts held, swinging back to a positive after reporting a net expense insurance contract held of N413.3 million a year earlier. Overall, profit before tax stood at N1.1 billion, compared to N1.8 billion in the previous year, while return on equity fell from 11.4% to 4.7%.
