How AIICO Insurance Profit Growth Masked by Rising Claims, Weak Share Price

AIICO Insurance has reported a pretax profit of ₦19.8 billion for 2025, representing a 24.86 per cent increase from ₦15.9 billion in 2024. However, the company’s full-year unaudited results reveal troubling trends that cast doubt on the sustainability of its earnings momentum.

Premiums received rose sharply to ₦189.2 billion from ₦156.1 billion, but claims paid also surged to ₦93.5 billion, eroding much of the underwriting gains. Insurance service expenses of ₦94.5 billion and net reinsurance costs of ₦33.5 billion further weighed on margins, leaving the insurance service result at just ₦9.5 billion.

While this marks a turnaround from a ₦3.0 billion loss in 2024, it remains modest compared to the scale of premiums written.

Advertisement

The imbalance between core insurance operations and investment reliance is stark. Net investment income soared to ₦82.4 billion, more than eight times the insurance service result, underscoring how heavily AIICO’s profitability depends on asset revaluations and interest income rather than underwriting strength.

A net fair value gain of ₦24.03 billion on assets accounted for a significant portion of earnings, raising questions about sustainability if market conditions shift.

Expenses also weighed heavily on performance. Insurance contract costs totaled ₦59.5 billion, while other operating expenses hit ₦17.4 billion, leaving pretax profit growth far less impressive when viewed against the company’s revenue base and asset expansion.

Advertisement

Despite the headline profit rise, the market has not rewarded AIICO. As of mid-trading on 5 February 2026, shares were down 1.90 per cent, trading at ₦4.12. The muted reaction suggests investors remain unconvinced by the company’s ability to translate rising premiums into stronger underwriting margins.

Total assets expanded to ₦579.6 billion from ₦416.4 billion, and equity rose to ₦94.9 billion, but the concentration of profitability in investment income highlights the same issue: earnings are being propped up by volatile market gains rather than insurance fundamentals.

For investors, the warning signs are clear. Rising claims, heavy expense burdens, and reliance on investment income cast doubt on the sustainability of AIICO’s growth story. The muted share price response shows the market is already pricing in these risks, leaving the insurer with much to prove in 2026.