Economy
Nigerian Insurance Industry Will Survive Weak Economy, Election—Agusto
By Adedapo Adesanya
A credit rating agency, Agusto & Co, has revealed that Nigeria’s insurance industry is poised to emerge stronger amid weak macroeconomic indicators and uncertainties surrounding the 2023 general elections.
This was contained in its 2023 insurance industry report, which provides a comprehensive review of the insurance landscape in Nigeria and the near-term expectation for the industry.
The report contains a review of how the Nigerian insurance industry has fared amidst the lingering macroeconomic headwinds and outlook for the Industry in an election year.
According to Agusto & Co., the Nigerian insurance industry’s estimated gross premium income (GPI) maintained its double-digit growth trend and crossed the N700 billion mark in FY 2022.
The uptick in the industry’s premium was driven by several factors, including improved economic activities and stronger regulatory support.
Furthermore, while the Industry’s performance in FY2021 was moderated by the payout of claims emanating from the violence that trailed the #EndSARS protest, such outflows were minimal in 2022, given the non-recurring nature of the crisis.
Consequently, the Nigerian insurance industry’s estimated net claims for FY2022 rose by a lower 13 per cent relative to the previous year. Notwithstanding, inflationary pressures continue to adversely impact claim settlements, underwriting costs, operating expenses and also moderate profitability indices.
Agusto & Co. also recognises that the country’s insecurity gaps, infrastructural shocks and aftermath of the#EndSARS protest have emphasised the benefits of insurance products, particularly fire and general accident policies.
One of the most notable highlights of the Industry in 2022 was the increase in third-party motor insurance policy rates by the National Insurance Commission (NAICOM), the apex regulator, on December 22, 2022. NAICOM raised the new premium for private motors to N15,000, staff buses to N20,000, commercial trucks/general cartage to N100,000, commercial tricycles to N5,000 and commercial motorcycles to N3,000. These policies previously had a basic rate of N5,000.
In addition to the new premium rates, NAICOM announced that the comprehensive motor insurance policy premium rate should not be less than 5 per cent of the sum insured after all rebates or discounts.
Although the policy has received some criticisms, Agusto & Co. believes that it would cushion the rising loss rates from the associated business line and support a boost in GPI in FY2023.
Nevertheless, Nigeria’s political environment will define the financial year 2023 for insurance operators.
The first half of 2023 would be characterised by electioneering activities, while the second half would bring a new administration and fresh ideas for fiscal and economic transformation.
The firm noted that possible election violence poses a downside risk that could adversely impact insurance operators, especially if it is a widespread occurrence across several states.
However, there will also be opportunities to secure new insurance contracts from the public sector, especially in the second half of 2023.
In the near term, Agusto & Co. expects the introduction of a risk-based capital regime to gain momentum while NAICOM continues to implement policies and directives that would boost the industry’s sustainability.
“A strong regulatory stance to claims payments which resulted in the withdrawal of the license of some insurers in 2022, though being contested in the court of law, would remain in 2023 and possibly going forward as part of NAICOM’s efforts to sanitise the industry.
“The non-conventional takaful insurance segment, which is an under-tapped area, is already witnessing significant growth as evidenced by the marked 172 per cent growth in GPI in FY2021.
“We anticipate that the segment would continue on its upward trajectory in the near term. Takaful insurers offer alternatives to conventional insurance, and their model is based on the concept of social solidarity, cooperation and mutual indemnification of losses of members,” according to a note shared with Business Post.
Agusto&Co. also believes that these alternative insurers would continue to leverage the large Muslim population in Nigeria, estimated at over 100 million, to grow the segment.
Albeit, the relatively low awareness of these alternative products remains a challenge to be surmounted.
Microinsurance is also poised for growth given the dwindling consumer purchasing power, large informal sector and relatively high poverty rate in the country.
“Overall, Agusto & Co. expects a modest performance by the Industry in FY 2023, supported by the rising yield environment. Initiatives such as the bancassurance model, which would enable insurance operators to partner with the banking industry to deepen their reach in the retail market, will also bolster the industry in our view. The rate hikes for third-party motor insurance and the bullish growth track for microinsurance, takaful insurance and some new entrants in the conventional insurance landscape are also growth drivers for the industry.
“Furthermore, the intensified marketing campaigns, awareness programmes and adoption of digital channels would continue to support penetration, albeit strong broker relationships would remain vital in bolstering performance,” the note said.
Agusto&Co. noted that the political terrain would also shift in the year 2023, and the operators’ ability to respond promptly to these changes would be a key factor for the industry’s performance in the near term.
By Adedapo Adesanya
MTN Group, Africa’s largest mobile network operator, has entered advanced discussions to buy approximately 75 per cent of shares in IHS Holding Limited (IHS Towers) that it does not already own.
The move would give the South African telco full control of IHS, which is the leading independent tower operator in several of its key markets, providing colocation services and supporting the expansion of mobile networks in regions with growing demand for digital connectivity.
In a cautionary announcement to investors on Thursday, MTN confirmed it is considering a transaction to acquire the remaining stake in the New York Stock Exchange-listed IHS, following recent market speculation.
The potential offer price would be “at a level near the last trading price” of IHS shares on the NYSE as of February 4, 2025, a period when the stock has seen a sharp rise in recent months, reflecting renewed investor confidence in the sector.
No binding agreement has been reached, and MTN emphasised there is no certainty that the deal will proceed.
However, if completed, the transaction could materially impact MTN’s share price, prompting the company to advise shareholders to exercise caution in trading until further updates.
MTN already holds a significant stake in IHS and maintains a deep operational partnership across multiple African markets.
Over the past decade, MTN has sold thousands of passive network sites to IHS through sale-and-leaseback deals, including a major transaction in South Africa in 2022 involving over 5,700 towers.
These arrangements allowed MTN to free up capital from infrastructure while securing long-term tower access via master lease agreements.
A full buyout would represent a dramatic strategic pivot for MTN, effectively bringing tower infrastructure back in-house after years of outsourcing to specialised operators like IHS.
MTN has previously voiced concerns about corporate governance at IHS, adding context to its cautious approach in the announcement.
If the deal falls through, MTN said it would continue exploring options to unlock value from its IHS investment, consistent with its disciplined capital allocation strategy.
The potential acquisition underscores the evolving dynamics in Africa’s telecom infrastructure sector, where operators weigh the benefits of owning versus leasing critical assets amid rising data demands and economic pressures.
By Adedapo Adesanya
For the third consecutive trading session, the NASD Over-the-Counter (OTC) Securities Exchange ended in the green territory, rising further by 0.77 per cent on Thursday, February 5.
Two price gainers helped the bourse to rally during the session, with the market capitalisation up by N16.87 billion to N2.197 trillion from N2.180 trillion and the NASD Unlisted Security Index (NSI) up by 3.18 points to 3,672 points from the 3,644.48 points in the midweek session.
The advancers’ group was led by Central Securities Clearing System (CSCS), which added N3.70 to sell at N48.67 per share versus the previous day’s N44.97 per share, and Afriland Properties Plc expanded by N1.01 to N15.01 per unit from N14.01 per unit.
It was observed that the alternative stock exchange recorded two price losers led by Geo-Fluids Plc, which further lost 51 Kobo to sell at N4.75 per share versus Wednesday’s closing price of N5.26 per share, and Industrial and General Insurance (IGI) declined by 6 Kobo to 59 Kobo per unit from 65 Kobo per unit.
During the session, the volume of securities transacted by investors slid by 51.9 per cent to 1.2 million units from 2.5 million units, the value of securities went down by 32.0 per cent to N12.0 million from N17.7 million, and the number of deals increased by 27.8 per cent to 23 deals from 18 deals.
At the close of trades, CSCS Plc was the most traded stock by value on a year-to-date basis with 16.2 million units exchanged for N659.9 million, followed by FrieslandCampina Wamco Nigeria Plc with 1.7 million units traded for N117.8 million, and Geo-Fluids Plc with 12.3 million units valued at N79.1 million.
CSCS Plc remained the most active stock by volume on a year-to-date basis with 16.2 million units sold for N659.9 million, trailed by Mass Telecom Innovation Plc with 13.6 million units valued at N5.5 million, and Geo-Fluids Plc with 12.3 million units worth N79.1 million.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited recorded another milestone after it further closed higher by 1.18 per cent on Thursday amid renewed confidence in the market.
The All-Share Index (ASI) crossed the 170,000-point threshold during the session as it added 1,975.18 points to the preceding day’s 168,030.18 points to settle at 170,005.36 points.
Also yesterday, the market capitalisation of Customs Street was up by 1,268 trillion to N109.129 trillion from the N107.861 it ended a day earlier.
The growth recorded during the session was powered 55 equities, which outweighed the losses recorded by 19 other equities.
Guinea Insurance expanded by 10.00 per cent to N1.43, Seplat Energy grew by 10.00 per cent to N7,370.00, RT Briscoe increased by 9.95 per cent to N11.49, Neimeth chalked up 9.90 per cent to close at N11.10, and Zichis rose by 9.89 per cent to N6.11.
At the other side, Deap Capital lost 9.62 per cent to trade at N6.20, Universal Insurance slipped by 9.43 per cent to N1.44, Haldane McCall declined by 9.09 per cent to N4.00, Red Star Express went down by 9.04 per cent to N15.60, and UPDC depreciated by 7.02 per cent to N5.30.
Business Post reports that the energy index was up by 4.68 per cent, the industrial goods improved by 0.79 per cent, the banking space grew by 0.64 per cent, and the consumer goods sector soared by 0.11 per cent, while the insurance counter lost 0.31 per cent.
Yesterday, market participants traded 713.0 million stocks valued at N22.3 billion in 46,104 deals versus the 694.8 million stocks worth N20.6 billion transacted in 42,095 deals on Wednesday, showing a spike in the trading volume, value, and number of deals by 2.62 per cent, 8.25 per cent, and 9.52 per cent, respectively.
Access Holdings sold 106.6 million shares valued at N2.5 billion, Chams transacted 44.5 million equities worth N201.3 million, Champion Breweries traded 44.5 million stocks for N774.3 million, Universal Insurance exchanged 34.8 million shares worth N53.6 million, and Deap Capital sold 22.7 million equities valued at N141.9 million.
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