Agusto & Co. has assigned a “Bbb-” long-term rating to Universal Insurance Plc, reflecting the company’s long operating history, improved profitability, low loss ratio, moderate liquidity position and effective deployment of digital initiatives.
The rating agency noted that Universal Insurance ability to maintain a solvency margin of 184.9 per cent, well above Agusto & Co.’s minimum threshold of 100 per cent, indicates a strong capacity to support its underwriting activities.
The strong growth according to Agusto was driven by initiatives aimed at deepening relationships with customers and insurance brokers, alongside improvements in customer experience through digital platforms.
It noted that as at 31 December 2024, Universal Insurance’s shareholders’ funds stood at N13.2 billion, representing a 27 per cent year-on-year increase, supported by full profit retention.
The company maintained a sound insurance revenue of N13.8 billion, representing a 71.9 per cent increase from the prior year.
The company’s reinsurance arrangements were tested in 2024 amid a spike in claims from the oil and gas segment. Gross claims more than doubled to N3.6 billion, but reinsurance recoveries reduced net claims by 48 per cent to N2.3 billion. As a result, the average loss ratio improved by 220 basis points to 14.7 per cent, significantly better than the 33.1 per cent industry average.
It noted that the company’s investment portfolio grew by 14.5 per cent to N10.5 billion at the end of 2024.
Operating cash flow strengthened significantly in 2024, rising 98.4 per cent to N3.1 billion, supported by higher premium collections and reinsurance recoveries. This covered liabilities for incurred claims 1.5 times, outperforming the industry average. However, liquidity metrics remained broadly stable due to an increase in estimated claims liabilities.
Improved underwriting performance and favourable portfolio valuations helped drive profit before tax to N2.1 billion, up sharply from N526.7 million in 2023. Pre-tax return on assets and equity improved to 11.4 per cent and 17.4 per cent, respectively, although both remained below industry averages. Claims payments in early 2025 moderated performance, but expected reinsurance recoveries are projected to support a rebound in profitability for the full year.
Based on these factors, Agusto & Co. assigned a stable outlook to Universal Insurance Plc’s ratings, reflecting expectations that improved underwriting discipline, successful capital raising and enhanced digital capabilities will support the company’s financial profile over the medium term.
Commenting, Dr. Jeff Duru, Managing Director/ CEO of Universal Insurance Plc, said “We acknowledge the recent “Bbb-” credit rating assigned to our company. It is indeed a reflection of hard work and the current macroeconomic environment and the ongoing investments we are making to support long-term growth and resilience.
“We are fully focused on strengthening our balance sheet, improving operating efficiency, and executing initiatives that we believe will enhance the metrics of our credit standing over time. Management remains committed to maintaining transparent communication with our stakeholders and to delivering sustainable value for shareholders including customers and employees.”