Foreign Exchange Volatility Erases 2025 Profit Gains, Pushing Nigerian Insurers Back Into Loss Territory
Nigeria’s insurance industry closed the 2025 financial year with an impressive uptick in revenue and premium growth but foreign exchange (FX) losses and rising claim costs have significantly eroded headline profits, wiping out gains made the previous year and dimming investor optimism.
Strong Revenue Growth Masks Profit Weakness
Across the 14 insurers quoted on the Nigerian Exchange (NGX), aggregate revenue climbed from ₦541.28 billion in 2024 to ₦655.02 billion in 2025, driven by robust premium mobilisation and expansion in both life and non life segments.
Despite this top line growth, combined Profit Before Tax (PBT) remained essentially flat at around ₦88 billion a marginal move from ₦87.55 billion the prior year. Analysts say this virtually unchanged profitability underscores how macroeconomic pressures have neutralised gains from core operations.
Currency Volatility Takes a Toll
The key culprit behind softer profits was foreign exchange volatility. A sharp swing in the naira during 2025 resulted in FX losses across most insurers’ books, reversing the strong FX-driven gains many experienced in 2024.
For example:
- AXA Mansard Insurance Plc saw its FX result swing from a ₦27 billion gain in 2024 to a ₦0.9 billion loss in 2025, contributing to a decline in PBT.
- Cornerstone Insurance Plc also reported a dramatic reversal from a large FX gain the previous year to a ₦1.9 billion FX loss in 2025, weighing heavily on profit levels.
The impact has been widespread:
about 13 out of 16 insurers with comparable data posted declines in net earnings, according to industry analysis.
The downturn has been described by some analysts as a “normalisation year” following the extraordinary FX gains seen in 2024, rather than an outright sector collapse.
Underwriting Gains Undermined by Rising Costs
While overall underwriting performance remained resilient, rising claims costs and higher reinsurance expenses further squeezed margins. Insurers are paying more to settle claims and to cede risk to reinsurers factors that, when combined with FX losses, lower the headline earnings reported to investors.
LASACO Assurance Plc illustrates this stress:
despite top line growth, it slipped into a full-year loss in 2025, as FX gains that cushioned results in 2024 faded.
Similarly, Prestige Assurance Plc saw profit before tax plunge by 76% to ₦741.3 million, despite rising revenue highlighting the disconnect between sales growth and bottom line performance.
Divergent Performances Within the Sector
Not all insurers were equally impacted. Some with limited FX exposure or strong operational controls managed to sustain profitability:
- Veritas Kapital Assurance Plc returned to profit in 2025, after a loss in the prior year, indicating company-specific resilience amid broader currency challenges.
- Universal Insurance Plc, with relatively limited foreign currency exposure, reported improved PBT, showcasing the benefits of reduced FX vulnerability.
What This Means for Investors and Policyholders
For investors, the muted profit growth and FX linked swings could temper expectations for dividend payouts in 2026, especially for firms that recorded sharp earnings declines.
Professionals within the sector also point to the need for improved FX risk management and hedging strategies, better underwriting controls, and deeper capital buffers to safeguard future earnings.
The Broader Economic Link
Nigeria’s macroeconomic backdrop with persistent currency volatility and inflation pressures continues to create an uneven operating environment for financial services firms. While insurers have made strides in premium mobilisation and market penetration, the challenge of converting that growth into sustainable profit remains tied to external economic forces.
Key Takeaways
Nigerian insurers recorded substantial revenue growth in 2025, but that was not enough to lift overall profits due to FX losses and rising costs.
Currency swings turned previous foreign exchange gains into losses, leading to a broad decline in net earnings across the sector.
Some insurers weathered the storm better than others, highlighting the importance of low FX exposure and strong operational discipline.
Dividend prospects and investor confidence could be impacted as companies focus more on risk management than topline expansion alone.Strong revenue growth in 2025 was offset by foreign exchange losses, rising reinsurance and claim costs, leaving profit growth flat or negative.
Several insurers, like LASACO Assurance Plc and Prestige Assurance Plc, saw profitability erode significantly due to FX reversals and cost pressures.
The industry must enhance risk management frameworks to better weather macro economic volatility in coming years.
Comments