GCR Affirms NEM Insurance Financial Strength Rating of AA+
GCR Ratings (GCR) has affirmed NEM Insurance Plc’s national scale financial strength rating of AA+(NG), with the outlook maintained as stable.
NEM Insurance Plc’s rating reflects its sustained leading position within the non-life insurance segment, as well as a sound financial profile characterised by strong risk-adjusted capitalisation, adequate liquidity, and good earnings capacity.
NEM maintains a robust competitive positioning, firmly established as the market leader in the Nigerian non-life insurance segment, with a market share of about 10% as of December 2025.
GCR said the insurer’s operational track record of over five decades, strong brand franchise and well-established relationship with intermediaries continue to support strong revenue growth.
As such, insurance revenue grew by 55.5%, registering NGN152.3 billion (USD106.1 million) as of December 2025. NEM’s business is well diversified, with four of the eight lines of business each contributing over 10.0% of insurance revenue.
While the newly established subsidiaries, NEM Health and NEM Asset Management, are yet to materially contribute to earnings, their evolving operations could provide some diversification benefits.
Additionally, the imminent launch of a life insurance business before Q4 2026 could further enhance its product offerings and strengthen its competitive positioning over the outlook horizon.
Earnings profile remains positive to the ratings, supported by sustained growth in insurance revenue, profitable underwriting and strong investment income.
Although net claims ratio increased to 35.5% in 2025 from 28.5% in 2024, the combined ratio remained largely stable at 86.2% in December 2025 versus 86.7% in 2024, supported by scale efficiencies and a contained cost structure.
Investment income remained strong, with total investment yield at 28.8% in December 2025, up from 18.9% in 2024. Looking ahead, ratings analysts said they expect the earnings profile to remain sound, supported by disciplined underwriting practices and growth in the other businesses.
NEM’s risk-adjusted capitalisation is positive to the rating. While the capital base grew by 29.1% to NGN84.5 billion (USD 58.8 million) in December 2025, aggregate risk exposures grew faster, driven by growth across all business lines.
As a result, the GCR capital adequacy ratio (CAR) moderated to 1.8x as of December 2025 from 2.2x in 2024.
Notwithstanding, the insurer’s statutory solvency margin remains robust at 20x as at the same period, up from 19.3x in 2024, exceeding the regulatory minimum requirement of 1x and comparing well with the new capital requirement for its license category.
Ratings analysts expect the GCR CAR to remain above 1.5x over the outlook period, reflecting projected business growth and strong earnings retention.
Liquidity assessment is positive to the rating, according to GCR. As of 31 December 2025, NEM held 57.4% of total investment securities in liquid assets while the balance was placed in equities, Eurobonds, property and other interest-bearing securities.
Hence, GCR liquidity coverage remains stable at 1.4x as of December 2025, down from 1.5x in 2024. Over the next 12-18 months, ratings analysts expect liquidity coverage to remain above 1.3x, barring liquidity strains stemming from the insurer’s business expansion plans.
The stable outlook reflects an expectation that NEM will sustain its market position supported by business expansion and diversification in line with strategy.
“We also expect risk-adjusted capitalisation and liquidity ratios to be maintained above 1.5x and 1.3x respectively over the outlook period”, GCR Ratings said in the report. FTSE Russell Suspends Nigeria’s Frontier Market Upgrade
