The Nigerian Exchange’s (NGX) Insurance index has recorded a remarkable 41 per cent gain week-on-week ((WoW), driven by the passage of a new law requiring insurance companies to raise fresh capital and making insurance for property and other assets mandatory.
This significant growth has outpaced the broader market, with the NGX All-Share Index rising by 3.18 per cent. The new law is expected to transform the insurance industry, increasing insurance penetration and attracting strategic and foreign investors.
Reviewing the sectoral performance, WESTERN POST gathered that the Insurance sector emerged as the top performer last week, surging by an eye-catching 41 per cent week-on-week. This rally was driven by investor optimism surrounding the sector’s growth prospects following the enactment of the new Insurance Act, which has sparked expectations of recapitalisation and regulatory reforms.
Stocks such as Mutual Benefits Assurance, AIICO Insurance, Royal Exchange, Sovereign Trust Insurance and Cornerstone Insurance were at the forefront of the rally, each posting weekly gains above 50 per cent.
The NGX Industrial Goods index followed with a weekly gain of 8.73 per cent, while Consumer Goods index and NGX Oil & Gas index rose 8.27 per cent and 0.17 per cent week-on-week.
In contrast, the NGX Commodities and Banking indices came under pressure, declining by 2.33 per cent and 0.75 per cent respectively
Also, the Insurance stocks top the gainers table for the week. Mutual Benefits Assurance led with a weekly gain of 60.44 per cent to close at N2.92 per share.
AIICO Insurance followed with a weekly gain of 59.06 per cent to close at N3.50, while Royal Exchange rose by 59.33 per cent W-o-W to close at N2.39, per share.
Others are Sovereign Trust Insurance, Cornerstone Insurance, Universal Insurance, Regency Insurance Veritas Kapital Assurance, Coronation Insurance and International Energy Insurance posted a weekly gain of 59.06 per cent, 54.46 per cent, 52.78 per cent, 51.19 per cent, 51.08 per cent, 46.52 per cent and 46.48 per cent respectively.
Capital market analysts noted that, the Insurance sector in particular is expected to remain in focus, given its reform-driven outlook and recent price momentum.
Speaking on the reform, CardinalStone said that “in our view, these reforms are expected to reshape the competitive landscape of the industry, with the recapitalisation directive likely to pose challenges for the relatively smaller operators, given the existing market fragmentation amidst other structural bottlenecks.
“Hence, we could see a wave of industry consolidation through mergers and acquisitions, as less-capitalised firms seek to meet the new thresholds within the stipulated timeframe. Insurers would be required to comply with the new capital requirements within 12 months of the law’s commencement, as stipulated by the National Assembly. However, we expect further regulatory guidance on implementation timelines, qualifying capital, and transitional provisions.”
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