AXA Mansard’s first-quarter profit has taken a hit from a reduction in foreign exchange (FX) gains, as expenses are growing faster than revenue growth, according to BusinessDay analysis.
For the first three months through March 2025, AXA Mansard’s after-tax profit fell by 51.74 percent to N6.21 billion from N12.87 billion as of March 2024.
The decline in profit was attributed to a 74.63 percent decrease, resulting in a drop to N2.3 billion from N12.8 billion in the company’s FX gains during the period. This reduction in foreign exchange gains, which had previously been a major contributor to earnings during a period of instability for the Naira, played a significant role in this downturn.
However, liquidity in the foreign exchange market has improved, especially in the first quarter of the year. Revenue was up 26.67 percent to N40.33 billion in the period under review from N31.84 billion the previous year.
Analysis by BusinessDay shows insurance service expenses grew by 46.51 percent, which is lower than the expansion in revenue, as claims expenses are soaring on the back of inflationary pressures.
According to the National Bureau of Statistics (NBS), the inflation rate in Nigeria decreased to 23.71 percent in April from 24.23 percent in March.
Also, there has been a slowdown in growth for insurance products due to weak consumer confidence in the service delivery of sector players.
Lack of trust for the claims payment process by consumers, combined with high unemployment, undermines penetration because it is difficult for people to voluntarily take up a cover in the country where over 50 percent of the population of 200 million live below the World Bank’s daily $1.98.
The insurance sector in Nigeria has a low penetration rate of about 1 percent, which is significantly lower than the global average of 7 percent, according to Insurance Market Research in Nigeria by Novatia Consulting.
Further breakdown of the company’s financial statement disclosed that despite low insurance penetration, AXA Mansard made more money from insurance and non-life business, amounting to N4.2 billion from N3.3 billion.
Total assets of AXA Mansard rose to N244.7 billion in the first three months from N194 billion in the same period of last year. The company is financially healthy, with equity increasing to N60.8 billion from N47 billion.
The group’s net cash used in operating activities stood at a negative N13.76 billion, a stark reversal from a net inflow of N29.35 billion during the same period in 2024.
Claims paid increased by 83 percent, from N12.5 billion to N22.9 billion, while underwriting expenses more than tripled from N2.79 billion to N10.99 billion. These spikes reflect AXA’s higher risk retention or increased policy activity, but they simultaneously exert pressure on liquidity.
Net cash used in investing activities stood at N3.84 billion, considerably lower than the N42.84 billion outflow recorded in Q1 2024.
There were no cash flows from financing activities in the quarter, no new borrowings or dividend payments. With cash equivalents plunging from N20.06 billion in December 2024 to N7.20 billion by March 2025, AXA is choosing not to plug its operational gap with debt, possibly to avoid balance sheet strain or maintain capital adequacy thresholds.
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