Joy Agwunobi
NEM Insurance Plc has received a significant boost to its credit profile as GCR Ratings (GCR) upgraded the insurer’s national scale financial strength rating to AA+(NG) from AA(NG), while maintaining a Stable Outlook. The agency said the improved rating reflects NEM Insurance’s deepening competitive position in Nigeria’s non-life insurance market, backed by solid capitalisation, healthy liquidity, and a strong earnings track record.
GCR noted that NEM Insurance has reinforced its status as one of the country’s leading non-life insurers, commanding an estimated 10 percent market share in 2024. The company’s insurance revenue surged by 88 percent to ₦98.0 billion (USD63.1 million) during the year, a performance attributed to its growing brand strength, long-standing market presence, and extensive relationships with brokers across the sector.
The rating agency highlighted that NEM’s revenue base remains well diversified, with four out of eight business lines contributing more than 10 percent of gross insurance revenue. Over the rating horizon, the company is expected to not only consolidate its market leadership in the non-life segment but also advance its planned expansion into the life insurance space,a move GCR believes will further enhance business diversification.
Earnings strengthen as underwriting and investment performance improve
GCR emphasised NEM Insurance’s robust earnings profile, shaped by sustained premium growth, improved underwriting outcomes, and a strong investment return environment. The insurer’s net incurred loss ratio improved to 28.5 percent in 2024, down from 33.6 percent in 2023, reflecting efficiency gains and scale benefits.
This positive shift translated to the normalisation of the combined ratio at 86.6 percent in 2024 (2023: 100.5%; 2022: 88.8%), placing the company ahead of several industry peers. Investment income also remained strong, with an yield of 18.9 percent, enabled by a high allocation to fixed-income instruments amid elevated interest rates.
Overall, NEM’s profitability strengthened substantially: profit after tax increased by 125.8 percent to ₦29.9 billion (USD19.3 million), driving a remarkable 43.1 percent return on revenue for 2024 (2023: 35.7%).
Looking ahead, GCR noted that NEM’s ability to sustain this earnings performance particularly as the firm diversifies into longer-term business lines that typically carry higher initial expense burdens will remain a key component of future rating considerations.
Risk-adjusted capitalisation continues to be a strong anchor for NEM’s rating. The insurer’s sizeable capital base relative to risk exposures helped lift the GCR Capital Adequacy Ratio (CAR) to 2.4x as of 31 December 2024, up from 2.1x in the prior year. Similarly, its statutory solvency margin remained highly elevated at 19.3x, far above the regulatory minimum of 1x.
GCR expects capital adequacy to hold within the 1.7x to 2.0x range over the next 12 to 18 months, supported by adequate earnings retention despite anticipated business expansion.
Liquidity also remains a strong positive factor. NEM reported a liquidity coverage ratio of 1.8x at the end of 2024 (2023: 1.7x), underpinned by substantial holdings in liquid securities and term deposits,which together accounted for 47.6 percent of its investment portfolio. The agency projects that liquidity coverage will remain above 1.5x over the outlook period, barring unexpected liquidity pressures linked to growth initiatives.
Stable outlook maintained
According to GCR, the Stable Outlook reflects expectations that NEM Insurance will maintain its strong market position while executing its expansion and diversification strategies. The agency also anticipates that capitalisation and liquidity ratios will remain comfortably above required thresholds, though earnings may moderate slightly due to the onboarding of more long-term products.
An upgrade in future could be triggered by further improvements in earnings and capitalisation, as well as liquidity metrics consistently above 2x, even amid expansion.
Management reacts as industry recognition grows
Responding to the rating action, Andrew Ikekhua, managing director of NEM Insurance Plc, said the upgrade underscores the company’s strategic underwriting discipline and its commitment to long-term profitability. He added that NEM Insurance remains focused on delivering reliable and customer-centric insurance solutions in line with its vision of becoming the preferred provider of value-driven insurance products.
NEM Insurance’s sustained performance has continued to attract industry recognition. Recently, Ikekhua was named among the Top 25 Chief Executive Officers in Nigeria, reflecting his leadership footprint within the corporate environment.
The insurer also clinched the General Insurance Company of the Year award at the 2025 Almond Insurance Industry Awards, emerging the top choice in a competitive category that highlights excellence and innovation in Nigeria’s insurance sector.
In addition, NEM secured the Sectoral Leadership Award – Financial Services (Insurance) at the 2025 PEARL Awards, further reinforcing its position as one of the industry’s standout performers.
