Last Update31 Jul 25
WaneInvestmentHouse made no meaningful changes to valuation assumptions.
Despite robust asset and revenue growth, LASACO Assurance Plc posted a significant decline in profitability in H1 2025, with a swing to pre-tax loss. This reflects rising cost pressure, particularly from insurance service expenses and reinsurance costs. We recommend a Hold rating pending improved underwriting efficiency and cost rationalization.
Key Strengths:
✅ Strong Asset Base Growth
- Total assets surged by 39% YoY to ₦44.09 billion from ₦31.75 billion, showing strengthened financial positioning and potential underwriting capacity.
✅ Robust Revenue Expansion
- Insurance revenue grew 47% YoY to ₦16.89 billion, reflecting increased market penetration and/or improved policy uptake.
✅ Massive Investment Gains
- Net investment income jumped by 288% YoY to ₦1.85 billion, providing a significant buffer against operating volatility.
✅ Improved Capitalization
- Shareholders’ funds rose by 84% to ₦22.11 billion, reinforcing solvency margins and the company’s ability to absorb future shocks.
Key Weaknesses:
⚠️ Profitability Under Pressure
- The company posted a pre-tax loss of ₦518 million, compared to a profit of ₦3.47 billion in H1 2024 — a 115% decline YoY.
⚠️ Rising Cost of Claims and Operations
- Insurance service expenses ballooned 67% YoY to ₦13.08 billion, faster than revenue growth, eroding underwriting profitability.
- Reinsurance costs also surged by 47%, further reducing net margins.
⚠️ Weaker Insurance Service Results
- Insurance service results dropped by 38% YoY to ₦1.13 billion, suggesting deteriorating underwriting quality and efficiency.
Outlook & Strategy:
While the top-line growth and balance sheet strengthening are commendable, LASACO’s declining profitability due to cost escalation is a red flag. Management must prioritize:
- Tightening underwriting discipline
- Reviewing reinsurance strategies
- Improving claims management
- Sustaining investment performance as a buffer
Valuation View & Investment Sentiment:
Despite short-term earnings pressure, LASACO remains fundamentally stable. Its rising capital base and investment gains position it for recovery if cost efficiency is restored.
📌 Rating: HOLD 📉 Watch for turnaround in bottom-line performance in subsequent quarters before upgrading to BUY. 📈 Recovery in underwriting margin and improved expense control could unlock value and drive share re-rating.
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