NEM Insurance Plc has announced a 67% rise in pretax profit to ₦5.8 billion for the third quarter of 2025, up from ₦3.4 billion in the same period last year, driven by strong premium growth and robust investment performance.

For the first nine months of the year, pretax profit climbed to ₦23.7 billion, compared to ₦15.7 billion in 2024. Insurance revenue rose 33% in Q3 to ₦32 billion, while the nine-month figure jumped 55% year-on-year to ₦107.4 billion.

After deducting ₦24.2 billion in insurance service expenses and ₦5.7 billion in reinsurance costs, the company’s insurance service result stood at ₦1.9 billion, slightly lower than the ₦2.8 billion recorded a year earlier.

However, investment income more than tripled, with net investment results rising 223% to ₦5.8 billion. Interest income contributed ₦3.8 billion, mainly from fixed deposits, while fair value gains from quoted securities added ₦2.9 billion.

Combined insurance and investment income reached ₦7.6 billion, up 66% year-on-year. After management expenses of ₦1.8 billion, post-tax profit stood at ₦5.02 billion a 72% increase over 2024.

On the balance sheet, total assets grew to ₦165.4 billion from ₦121.9 billion, with financial investments at amortized cost making up ₦74.7 billion and reinsurance contract assets at ₦34.6 billion. Total equity rose 24% to ₦80.9 billion, driven by retained earnings, which increased to ₦53.4 billion.

Total liabilities climbed to ₦84.4 billion, mainly from insurance contract liabilities of ₦69.3 billion. During the period, NEM Insurance received ₦122.2 billion in premiums, up 43%, and paid ₦30.5 billion in claims, representing a 104% increase year-on-year

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Emerging & Frontier Capital (EFC) has warned that the National Pension Commission’s (PenCom) new capital rules for Pension Fund Administrators (PFAs) could hurt profitability, even as they promote consolidation and stability in the industry.

PenCom recently raised the minimum capital requirement from ₦5 billion to ₦20 billion for PFAs with Assets Under Management (AUM) below ₦500 billion, and ₦20 billion plus 1% of AUM above ₦500 billion for larger firms. Operators must comply by December 31, 2026.

EFC described the policy as logical but cautioned that it could sharply reduce returns and dividend payouts. The firm estimated that a ₦5 billion investment with a 10-year internal rate of return (IRR) of 34.2% could now yield just 3.6%, while a ₦20 billion investment might post a negative IRR of -8.3%.

The report also projected that returns for top operators like Stanbic IBTC Pensions and Access ARM Pensions could fall by up to 20 percentage points by 2031.

EFC suggested that PenCom adopt AUM-based requirements and encourage PFAs to list on the stock exchange to improve transparency and allow contributors to benefit through dividends.

Despite profitability concerns, the firm said the reforms would likely streamline the industry and improve efficiency over time.

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