N5.77bn Claims Burden Crashes SUNU Assurances’ H1 Profit by 95%

SUNU Assurances Nigeria Plc paid significantly higher insurance claims in the first half of 2026 as growing underwriting obligations weighed on profitability, even as the insurer expanded insurance revenue and investment income during the period.

The unaudited financial statements for the six months ended June 30, 2026 filed on the Nigerian Exchange Limited (NGX) on Thursday showed that gross claims paid more than doubled to N5.77 billion, from N2.58 billion recorded in the corresponding period of 2025.

After adjusting for salvage recoveries, incurred claims and related expenses rose to N5.75 billion, representing an increase of about 125 per cent year-on-year.

The higher claims experience, together with increases in outstanding claims and acquisition costs, pushed total insurance service expenses up by 69.3 per cent to N8.23 billion, compared with N4.86 billion a year earlier.

Although insurance revenue increased by 18.4 per cent to N11.80 billion, the surge in claims and underwriting costs compressed underwriting performance. Insurance service result declined by almost 29 per cent to N2.37 billion, from N3.34 billion in the first half of 2025.

The weaker underwriting outcome filtered through to the bottom line.

According to the report analysed by BUSINESS METRICS, profit before tax fell sharply to N234.15 million, representing an 85.4 per cent decline from N1.61 billion recorded in the corresponding period of last year.

After tax, profit dropped to N60.11 million, compared with N1.17 billion a year earlier. Profit attributable to shareholders also declined to N29.40 million from N1.12 billion in the first half of 2025.

The results nevertheless indicate that the Group continued to grow its core insurance business despite the earnings pressure.

Insurance revenue rose to N11.80 billion from N9.97 billion, supported by total premiums of N13.07 billion, comprising N12.98 billion in gross direct premiums and N95.38 million from inward reinsurance business.

Beyond underwriting operations, SUNU Assurances recorded stronger investment returns during the period.

Investment income increased by 25.7 per cent to N974.73 million, while income from its non-insurance subsidiaries remained broadly stable at N89.66 million. The Group also reported a N52.85 million fair value gain on financial assets and recognised N25.29 million in impairment reversals, helping to cushion the impact of higher claims costs.

Operating expenses, however, continued to rise.

Employee benefit expenses climbed to N959.75 million, while other operating expenses increased to N2.16 billion, reflecting the broader inflationary and operating cost pressures facing businesses across the economy.

An analysis of the insurance liabilities also suggests that the company is carrying a larger book of business into the second half of the year.

Insurance contract liabilities rose to N8.74 billion at the end of June 2026 from N7.00 billion at the beginning of the year, while liabilities for remaining coverage increased to N4.81 billion, indicating growth in unearned premium obligations and future policy commitments.

Reinsurance contract assets similarly increased to N3.67 billion from N2.74 billion, reflecting greater utilisation of reinsurance arrangements to manage underwriting risks.

The financial statements suggest that while SUNU Assurances continued to expand premium generation and investment income during the period, the substantial increase in claims settlements and underwriting costs more than offset those gains, leaving profitability under pressure despite continued growth in its insurance operations.