Sovereign Trust Insurance Plc, a leading underwriting firm in Nigeria, Africa, has recorded a profit before tax of N1.02 billion for the 2025 financial year. Despite maintaining its profitability, the figure represents a 61 percent decrease from the N2.64 billion reported during the corresponding period in 2024, as the firm navigated a challenging economic environment where the Sovereign Trust Insurance profit was impacted by rising costs.
Okay News reports that the company’s performance was characterized by strong top-line growth that failed to trickle down to the bottom line due to mounting operational pressures. The results, submitted to the Nigerian Exchange (NGX), Nigeria’s primary stock market, showed that the firm is grappling with high service delivery costs even as the Sovereign Trust Insurance profit remains positive.
The bulk of the earnings during the period was driven by insurance revenue, which climbed to N44.62 billion from the N40.45 billion recorded in the previous year. This 10.32 percent growth was largely supported by higher premiums, which reached N46.2 billion, up from N42.01 billion, though these gains were not enough to significantly boost the overall Sovereign Trust Insurance profit.
Insurance service expenses surged to N21.9 billion during the year, while reinsurance costs rose to N18.5 billion, putting immense pressure on the insurance service result. These high expenditures compressed the margins for the firm, resulting in an insurance service result of N4.18 billion compared to N6.6 billion in 2024, a factor that ultimately weighed on the final Sovereign Trust Insurance profit.
Investment income remained relatively stable at N1.53 billion, primarily driven by interest income and fair value gains on financial assets held by the company. However, this stability was insufficient to mitigate other operating expenses of N4.8 billion, which were largely related to employee benefits and administrative costs, thereby limiting the growth of the Sovereign Trust Insurance profit.
On the balance sheet, total assets saw a modest increase of 3 percent, rising to N29.13 billion from N28.31 billion in the preceding year. Cash and cash equivalents of N11.9 billion formed a significant portion of these assets, providing a liquid buffer for the company even as the Sovereign Trust Insurance profit faced contraction during the period.
Market reaction to the results has been muted since the disclosure was made on February 5, 2026, with the company’s shares trading at N3.38. Investor sentiment remains cautious as the firm focuses on managing its cost-to-income ratio to protect the Sovereign Trust Insurance profit in the coming quarters while total equity increased slightly to N16.07 billion.
