By David Akinmola
Sovereign Trust Insurance Plc returned a profit before tax of ₦1.02 billion for the year ended December 2025, supported by growth in insurance revenue, although higher operating and reinsurance costs significantly squeezed earnings, according to the company’s unaudited financial statement filed on the Nigerian Exchange.
The result represents a sharp decline from the ₦2.64 billion posted in 2024, underscoring the pressure of rising claims, expenses and broader cost inflation across the insurance industry, despite improved premium income.
Gross insurance revenue rose by 10.3 per cent to ₦44.62 billion from ₦40.45 billion a year earlier, driven largely by higher premium inflows, which climbed to ₦46.2 billion. After adjusting for net liabilities for remaining coverage, reported insurance revenue settled at ₦44.6 billion.
However, profitability weakened as insurance service expenses increased to ₦21.9 billion, while reinsurance costs rose to ₦18.5 billion. These pressures compressed margins and dragged the insurance service result down to ₦4.18 billion from ₦6.6 billion in the prior year.
Investment income remained relatively flat at ₦1.53 billion, compared with ₦1.59 billion in 2024, supported mainly by interest income and fair value gains on financial assets. The modest contribution from investments was insufficient to offset other operating expenses, which rose to ₦4.8 billion, largely reflecting higher employee-related and administrative costs.
As a result, operating profit declined to ₦1.02 billion from ₦2.6 billion in 2024, with profit before tax settling at the same level. No impairment charges were recorded during the year.
On the balance sheet, total assets grew marginally by three per cent to ₦29.13 billion from ₦28.31 billion, with cash and cash equivalents of ₦11.9 billion accounting for a significant portion, down from ₦13.17 billion a year earlier. Total equity edged up to ₦16.07 billion from ₦15.7 billion, while retained earnings narrowed sharply to ₦621.3 million from ₦1.7 billion.
Market reaction to the results has been muted. Shares of Sovereign Trust Insurance Plc were down about 3.7 per cent month-to-date, trading at ₦3.38, as investors weigh the impact of rising costs on earnings against steady revenue growth.
Analysts say the results mirror broader industry trends, where insurers are growing top-line premiums but facing sustained margin pressure from higher claims, reinsurance expenses and operating costs in a challenging macroeconomic environment.
