Nigerian insurer Universal Insurance Plc has received a significant endorsement from a leading rating agency, strengthening its position in the competitive financial market. Agusto & Co. has assigned the company a BBB- long-term rating with a stable outlook, a decision announced on 25 December 2024. The rating reflects the firm's strengthened financial health, marked by improved profitability and a solid liquidity buffer.
Financial Performance Driving the Rating
The agency's assessment was heavily influenced by Universal Insurance's impressive financial results for the 2024 fiscal year. A key highlight is the company's solvency margin of 184.9%, which is substantially higher than the 100% minimum required by regulators. This robust cushion underscores the insurer's strong capacity to absorb potential risks and supports its ongoing underwriting operations.
The company's bottom line saw remarkable growth, with profit before tax skyrocketing to N2.1 billion from N526.7 million in the previous year. This surge was supported by a 71.9% increase in insurance revenue, which reached N13.8 billion. Shareholders' funds also grew impressively by 27% year-on-year to stand at N13.2 billion, bolstered by a policy of full profit retention.
Strategic Management and Risk Mitigation
While gross claims did rise to N3.6 billion, primarily driven by the oil and gas portfolio, the company's strategic use of reinsurance proved highly effective. Reinsurance recoveries slashed the net claims figure by 48%, a performance that outshone the industry average. This savvy risk management helped protect profitability.
The insurer also demonstrated growth in its investment activities, with its portfolio expanding by 14.5% to N10.5 billion. Perhaps most telling is the strength of its operational cash flow, which nearly doubled to N3.1 billion—enough to cover incurred claims liabilities 1.5 times over. Agusto & Co noted that while claims payments in early 2025 impacted performance, anticipated reinsurance recoveries are expected to support full-year profitability.
Leadership's Commitment to Resilience
Dr. Jeff Duru, the Managing Director of Universal Insurance Plc, stated that the BBB- rating is a validation of the management team's focused strategy. He emphasized their commitment to strengthening the company's resilience, enhancing operating efficiency, and delivering sustainable value to stakeholders, all while navigating Nigeria's complex macroeconomic environment. The rating agency attributed part of the strong 2024 performance to successful initiatives aimed at deepening relationships with customers and brokers, alongside marked improvements in the digital customer experience.
