Global Financial Service Corporation, Fitch Ratings has stated that the Nigerian insurance industry was not experiencing a downturn and that the industry was unaffected by the weakening Nigerian economy.
The Nigerian economy has been experiencing a downturn since the fall in global oil prices leading to a shortfall in its revenue and rising debt profile.
However, Fitch Ratings predicted that the Nigerian insurance sector will continue to grow despite the struggling economy reflected in its macronomic indicators of growth.
Fitch stated that though the industry had experienced declining growth rates in recent years, the industry was headed back to the top saying, “The Nigerian insurance industry will continue to expand, despite recent economic headwinds and significant structural challenges. The industry has experienced declining growth rates in recent years, albeit from a high base.”
Fitch made this prediction in a recently released report “Nigerian Insurance Market” and gave reasons for the prediction and for the corporation saying the Nigerian insurance industry fundamentals were “intact”.
The corporation said, “The number of leading insurers have maintained strong premium and balance sheet growth over the past three years. Favourable factors supporting the long term development of the industry include robust demographic fundamentals, investor interest and low insurance penetration.
“Fitch expects recent naira weakness to present an opportunity for foreign investors by providing an affordable entry point, while the difficult operating environment may incentivise small under-capitalised insurers to consider a sale,” it added.
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