…as 80% of firms trade below 40 kobo per share
- Govt, NAICOM over-taxing us -Operators
Investors in the insurance sub-sector of the Nigerian Stock Exchange have lost N10.8 billion of their stakes in the shares of the quoted companies in the bourse.
The market capitalisation of the 20 quoted firms dropped from N161.28 billion recorded as at January 15, 2018, to N150.41 by March 21, 2018.
Investigations revealed that only five out of the 20 listed insurance firms managed to trade their shares above 50 kobo in the first quarter of 2018, which is an indication that all is not well with the industry.
While Mansard Insurance Plc., NEM Insurance Plc., AIICO Plc., Law Union Insurance Plc., WAPIC Plc., Continental Re-Insurance Plc. traded at N2.53, N2.50, 66kobo, 82 kobo, 54 kobo and N1.89, respectively, the performances of the others in the quarter were described as pathetic by their shareholders.
For instance, African Insurance Plc. ended the quarter at 23 kobo; Guinea Insurance Plc., 40 kobo; LASACO Plc., 37 kobo; Niger Insurance, 34 kobo; Prestige Insurance, 49 kobo; Equity Assurance Plc., 30 kobo; Hallmark Insurance, 31 kobo; Regal Insurance, 26 kobo; Sovereign Trust Assurance, 20 kobo and STD Insurance traded at 44 kobo at the end of the period under review.
After paying fortunes to the internationally rated auditing firms that work on our financials, NAICOM insists we pay N1 million for the submission of our result. If the result is returned for amendments, the regulator insists we pay another N1 million every time we re-submit the results
Others are: African Alliance Insurance, Cornerstone Insurance, Consolidated Hallmark Plc., Unity Capital, Standard Alliance Insurance, Unic Diversified Holdings and Mutual Benefit Insurance.
Findings also revealed that while the gross premium collected by insurance companies in Nigeria was worth N684 billion, their counterparts in South Africa recorded a premium worth N1.36 trillion, which is about 200 per cent more than Nigeria’s insurance sector’s.
Also, the sector’s contribution to the Nigerian Gross Domestic Product stood at a meagre 0.74 per cent, while it’s Kenyan and South African counterparts contribute 17 per cent and 3.4 per cent, respectively.
REGULATORS MUST SIT UP, SAY SHAREHOLDERS
Bitter about the consistent fall in the shares of insurance firms in the emerging market, their shareholders have given the National Insurance Commission three months to mitigate the challenges causing the lull in the industry.
The Chairman, Ibadan Zone Shareholders Association of Nigeria, Mr. Eric Akinduro, expressed dismay on the rate shareholders’ funds depreciate in value on the floor of the
Exchange.
According to him, it is time for the regulators to review some laws regulating the affairs of the industry and devise new ways to approach insurance in Nigeria.
He said, “NAICOM and government must review most of the industry laws in three months, to save face. Such a review would enhance optimum efficiency in the operation of the practitioners, and forestall further stagnation in their share prices.
“NAICOM should find out why it is difficult for the companies to thrive like their foreign counterparts across the globe. If it will be necessary for the regulator to check their financials, it is a welcome development by the shareholders.”
The President, Constance Shareholders Association, Mallam Shehu Mikail, said, “Regulators must review existing laws regulating the sector, and ensure that the board and management operate with a level of transparency and
accountability.
“Insurance services in the country have a very low level of penetration and there is need for more awareness campaign for insurance products in
Nigeria.
“They ought to be competing with counterparts in the United States of America, where insurance companies own the banks, and they have liquidity. The negative attitude of Nigerians might not be unconnected with the poor attitude of the insurers, as regards non-payment of claims.
“Some insurance companies default in payment of claims, which has adversely affected the image of the industry, and consequently, the confidence in insurers. The regulatory authorities must sit up.”
GOVT, NAICOM TAXES, LEVIES TOO HIGH -OPERATORS
However, operators blamed the lull witnessed in the industry on what they described as harsh business environment created by the Federal Government and NAICOM.
An impeccable source in one of the leading insurance firms in the country, who preferred anonymity due to the sensitivity of the issue, told our correspondent that some of the policies of the government and NAICOM were designed to frustrate insurance firms as they made it impossible for operators to pay dividends to their
shareholders.
The executive director of the firm, which has operated in Nigeria for over 50 years, said, “Unlike what is obtainable in other countries, government insists operators pay taxes on the 75 per cent of the claims they pay, aside from the normal tax paid by the companies. Taxes paid by our company on claims run into hundreds of millions. How do we pay dividend or boost share value in the market with such
expenses?
“Also, after paying fortunes to the internationally rated auditing firms that work on our financials, NAICOM insists we pay N1 million for the submission of our result. If the result is returned for amendments, the regulator insists we pay another N1 million every time we re-submit the results. These create holes in our pockets and hinder some of us from paying dividends.”
The Director General of the Chartered Insurance Institute of Nigeria, Mr. Richard Borokini, blamed the lull on the weakness of the regulator to enforce insurance in the
country.
He said, “It is generally weak in Nigeria. That is why it is possible for somebody to be going about with a fake insurance policy certificate. Instead of going to a registered insurance company to buy genuine insurance policies, some people decide to go and buy fake insurance policies from the port. If Customs officials would ensure that every importer carries a genuine insurance cover, then there won’t be any fake insurance policy.
“The same is with motor vehicle particulars. Enforcement is also weak, because at the place where these documents are issued, there is always a racket, and definitely it is at
the licensing
offices where vehicle particulars are issued that some of the cabals operate, giving fake insurance
certificates.”
The former president of the Nigerian Council of Registered Insurance Brokers, Chief Babajide Olatunde-Agbeja, tasked the government and
regulators to introduce punitive measures to make their directives
effectual.
He said, “The fortunes of the insurance sector will improve, if compulsory insurance could be enforced. We appeal to the Federal Government to ensure that there are punitive measures attached to define these compulsory
insurances.
“This will ensure a win-win situation for all stakeholders, as claims will be paid to victims of accidents, especially third parties.
This is not about insurance companies, but the insuring public.”
