NEM Insurance’s Q1 2026 PAT declines 68.2% year-on-year to N4.1b
NEM Insurance’s Q1 2026 results reflect a softer profitability numbers, with profit after tax declining 68.2 % year-on-year to N4.1 billion. The moderation in earnings was primarily driven by weaker underwriting performance, as the insurance service margin narrowed from 34.07% to 19.33%, representing a decline of about 1,475 basis points. This was underpinned by a combination of lower revenue and higher claims, with the loss ratio rising by 601 basis points to 23.62%, partly reflecting increased fire and general accident claims during the period.
Insurance revenue declined by 19.1% to N37.2 billion, with contractions recorded across key segments including motor, oil and gas, and fire lines. At the same time, net reinsurance expenses increased by 25.4% to N9.9 billion, adding to cost pressures. Consequently, the insurance service result settled at N7.2 billion, down 54.1% year-on-year. On the investment side, income was relatively subdued, as interest revenue fell 33.7% to N1.4 billion, while investment yield moderated to 1.31% from 2.11%, reflecting a lower interest rate environment and the absence of significant fair value or foreign exchange gains. As a result, return on average equity declined to 4.63% from 15.26% in the prior year.
On a quarter-on-quarter basis, performance showed some improvement. Profit after tax increased by 13.8% from Q4 2025, while the insurance service result rose by 23.7%, supported largely by a 37.4% reduction in net reinsurance expenses. This suggests some easing in cost pressures relative to the latter part of 2025, although year-on-year trends remain more indicative of underlying performance.
From a balance sheet perspective, insurance contract liabilities increased by 23.9% to N78.7 billion, largely reflecting growth in unearned premium reserves in line with higher gross premiums written but not yet earned. The prior “other technical liabilities” balance have been reclassified into this line, moderating the underlying growth impact. Cash balances declined by 42.6% to N15.9 billion, while financial investments grew modestly by 6.8% to N105.6 billion. Shareholders’ equity edged higher to N88.1 billion; however, the lower return on equity indicates reduced earnings efficiency relative to prior periods.
Overall, Q1 2026 reflects a more challenging operating environment for NEM Insurance, characterised by softer premium income, elevated claims, and lower investment returns. While the sequential improvement from Q4 2025 is encouraging, a sustained recovery in profitability will depend on a rebound in premiums growth, moderation in claims, particularly within fire and general accident segments—and improved yields on the investment portfolio. Developments in reinsurance costs will also remain an important factor in shaping performance over the coming quarters.
