AXA Mansard’s Q1 2025 Performance: A Deep Dive into Declining Profits and Strategic Outlook
AXA Mansard Insurance Plc, a prominent player in the Nigerian insurance landscape, experienced a significant downturn in profitability during the first quarter of 2025. The company’s profit plummeted by 52%, falling from N12.88 billion in Q1 2024 to N6.21 billion in Q1 2025. This substantial decline can be primarily attributed to a confluence of factors, including escalating operating expenses, a surge in insurance claims, and impairments on financial assets. This confluence of negative pressures overshadowed the positive impact of increased insurance revenue, ultimately contributing to the erosion of the company’s bottom line.
While profitability suffered a significant blow, AXA Mansard witnessed encouraging growth in its core insurance business. Insurance revenue for Q1 2025 surged by 27%, reaching N40.33 billion compared to N31.85 billion in the corresponding period of the previous year. This robust growth in insurance revenue was driven by increased premium collection and an expanding customer base, signaling a positive trajectory for the company’s core operations. However, the rise in insurance revenue was insufficient to offset the substantial increase in expenses, thereby resulting in a net decline in profit.
A closer examination of AXA Mansard’s financials reveals a significant escalation in insurance service expenses, which jumped by a staggering 47% to N27.29 billion in Q1 2025 from N18.57 billion in Q1 2024. This substantial rise in insurance service expenses was primarily driven by a higher volume of claims payouts, indicating a potential increase in the frequency or severity of insured events. Furthermore, the net expense arising from reinsurance contracts, while remaining relatively stable compared to the previous year at N8.58 billion, contributed to the overall increase in expenses. The company’s reliance on reinsurance to mitigate risk underscores the volatility inherent in the insurance industry.
In addition to the surge in insurance-related expenses, AXA Mansard also incurred impairment losses on financial assets amounting to N74.7 million. This impairment charge, while relatively small compared to the overall scale of the company’s operations, further contributed to the decline in profitability. Despite this impairment charge, the company’s investment income demonstrated resilience, growing by 14% to N5.85 billion in Q1 2025, up from N4.7 billion in Q1 2024. This growth was primarily attributable to higher returns on investment securities, showcasing the company’s ability to generate income from its investment portfolio.
The overall increase in operational costs, including employee benefits, marketing, and administrative expenses, further compressed AXA Mansard’s profitability. Total expenses rose by 5% to N7.55 billion in Q1 2025 compared to N7.18 billion in Q1 2024. A significant driver of this increase was the 47% surge in employee benefit expenses, which reached N2.16 billion compared to N1.46 billion in the previous year. This rise in employee benefit expenses likely reflects increased personnel costs, potentially due to salary adjustments, benefits enhancements, or workforce expansion. Marketing and administrative expenses also experienced a moderate increase of 3%, reaching N977.8 million.
While the company’s profit performance was disappointing, AXA Mansard’s total comprehensive income for Q1 2025 offered a glimmer of hope. Total comprehensive income reached N7.93 billion, a substantial 42% increase from N5.6 billion in Q1 2024. This significant improvement was primarily attributed to positive movements in the fair value of debt securities, which increased by N1.64 billion compared to a negative change of N7.32 billion in the corresponding period of the previous year. This positive swing in the fair value of debt securities partially offset the negative impact of declining profit from operations.
The decline in profitability translated into a significant drop in earnings per share (EPS). AXA Mansard’s EPS for Q1 2025 fell to 69 kobo, a 51% decline from 140 kobo reported in Q1 2024. This substantial drop in EPS reflects the challenges faced by the company during the quarter, including increased expenses and impairments. Despite these challenges, AXA Mansard maintains an optimistic outlook for the future, citing growth opportunities in its core insurance business and investment portfolio.
Looking ahead, AXA Mansard’s management has expressed confidence in the company’s ability to navigate the current challenges and deliver sustained growth. The company’s strategic focus for the remainder of 2025 centers on cost management, improving claims management processes, and capitalizing on investment opportunities to enhance profitability. These strategic initiatives aim to address the key factors that contributed to the decline in profitability during the first quarter.
AXA Mansard’s projected insurance revenue for Q2 2025 stands at N86.78 billion, according to a forecast statement filed with the Nigerian Exchange Limited. This ambitious projection suggests that the company anticipates a significant rebound in its core insurance business. The realization of this projection will be crucial for AXA Mansard’s ability to recover from the Q1 profit decline and deliver on its commitment to shareholder value creation. The company remains committed to its long-term objectives of delivering value to its shareholders and providing excellent service to its customers, navigating the challenges of a dynamic operating environment.
