In our last analysis, Prestige Assurance (Prestige) was noted for its steady position in Nigeria’s insurance sector, but recent operational challenges, particularly the impact of rising inflation and currency devaluation, are adding complexity. With the Nigerian naira facing severe depreciation, the company’s foreign currency obligations have increased in cost, adding pressure on cash flow and profitability. This situation is further complicated by rising operational costs within Nigeria, as inflation rates impact the pricing of goods and services, making it more expensive for Prestige to maintain its business operations.

In its latest financial reports, Prestige saw gross premium income rise by 12%, reflecting sustained demand for insurance services despite economic pressures. However, underwriting costs have sharply increased, cutting into profit margins and impacting net income. The company’s claims payout has also risen, driven by higher-than-expected policy claims in sectors like agriculture and health. To manage these costs, Prestige is exploring options such as optimizing its claims process and reducing operational overheads.

Looking forward, Prestige’s strategy appears focused on strengthening its market share through digital transformation and improved claims management processes. However, until there is more stability in Nigeria’s economic environment, particularly in terms of exchange rates and inflation, investors should consider the potential volatility in short-term earnings.

The most important thing about the Elliot Wave chart above is that Prestige has completed wave 4 at 0.504 region which is 0.386 Fibonacci of wave 3. Wave 3 correction can be seen labelled as A-B-C with the C wave making a triangle (a)-(b)-9c)-(d)-(e).

According to the Elliot Wave theory, this means that more strength is expected in the wave 5 going forward.