AIICO Insurance Plc reported that its nine-month pre-tax profit had jumped 27% to N19.4 billion. Its profit after tax of N17.3 billion beat the N14.4 billion the insurer had forecast to the exchange earlier in the year.
Its shares fell 6.6% that day.
AIICO was not alone. Across Nigeria’s listed insurance industry, the third-quarter results season produced a string of earnings beats, and investors mostly looked past them.
AXA Mansard Insurance Plc’s profit after tax rose 81% to N10.9 billion, more than double its own forecast of N5.1 billion. Coronation Insurance Plc’s profit rose 71%. NEM Insurance Plc earned N26.8 billion in nine months, more than its total for 2025. Five of the six largest listed underwriters grew profit by between a quarter and four-fifths, but their share prices tell a different story.
AXA Mansard opened the year at N13.70 and traded around N11.65 in early November, roughly 15% lower and well below its 52-week high of N18.70. Coronation has fallen about a third, from N3.25 to about N2.22. Cornerstone Insurance Plc is down about 24% year to date and AIICO about 6%.
The disconnect has left insurers among the cheapest stocks on the Nigerian Exchange. It also raises a question for investors: is the market mispricing the sector, or seeing risks the headline numbers don’t show?
In general, the Insurance Index fell 5.52% in October and is down 13.64% year to date, the only major sector index in negative territory. Over the same period, the banking index had gained 60% and the oil-and-gas index 128%. The All-Share Index was up 60%.
That is a sharp reversal for a sector that beat the broader market in 2025. Insurance stocks returned about 66% that year, against 51% for the All-Share Index.
The result is unusually low valuations. Based on annualising their nine-month earnings, AIICO trades at about 5.6 times profit, Custodian Investment Plc at about 5.9 times, and AXA Mansard at about 7.2 times. NEM, the most profitable of the group, trades at about 7.9 times. Coronation and Cornerstone are valued at roughly the book value of their equity, and AIICO at only slightly more.
Those multiples imply earnings yields well into double digits, for companies whose annualised returns on equity range from about 13% at Cornerstone to nearly 38% at NEM.
Three concerns explain much of the gap, the first concern points to dilution. Under the Nigerian Insurance Industry Reform Act 2025, insurers had until July 2026 to raise their capital to new minimum levels. Many met the requirement by issuing shares. The regulator says 43 insurers and reinsurers complied.
The second is the quality of earnings. Much of this year’s profit growth came from investment portfolios rather than underwriting. Nigerian bond and treasury-bill yields stayed high, and insurers with large fixed-income books captured them.
The third is cash. Several insurers reported profits that did not turn into cash. NEM’s operating cash flow swung to an outflow of N1.1 billion from an inflow of N10.3 billion, as premiums still owed by its customers rose from under N100 million to N9.5 billion. Custodian’s operating cash flow also turned negative, although that probably reflects the merchant bank it now consolidates.
The sell-off has not been uniform, as some stocks did show significant exceptions. Custodian’s shares are up about 50% this year at around N65. Even so, they have pulled back from about N87 in April, despite the company reporting a 26% rise in nine-month pre-tax profit.
Some of the sector’s most dramatic share-price gains have come from its weakest companies. Fortis Global Insurance Plc rose 805% in the first nine months on a headline basis. Adjusted for its 1-for-4 share reconstruction, the gain shrinks to 126%, and the company is still loss-making.
Guinea Insurance Plc’s shares rose 43% in October after its capital raise, despite a first-half loss. For investors, those moves mean the share prices are telling them little about which insurers are actually performing.
Dividends may be the clearest test. Cornerstone’s last payout of 28 kobo gives a yield of about 6% at current prices, the highest among the large insurers, and Custodian yields about 4%. Coronation, which has not paid a dividend, has told shareholders it hopes to resume payouts within a year, while AXA Mansard paid none in 2026.
If full-year results due early next year show that profits are holding up on the enlarged share bases, the valuation gap could narrow. The key evidence would be dividends paid on the larger share counts and receivables turning into cash.
Until then, the market seems to be treating the recapitalized insurance sector with suspicion. Stronger capital and higher profits are giving investors a better industry. They have not yet given them a reason to pay more for their shares.
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