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Poll: Ministry of Niger Delta
Do you support the recently-established ministry of Niger Delta?
Selected Insurance stocks that can delight investors
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The cause of this has been attributed to the non-existence of enabling environment for insurance and the problem of inadequate capital. However the just concluded capital raising exercise is expected to tackle the problem of capital inadequacy and the enlarged reform of the financial service industry will put the industry in its position of aiding businesses in particular and economy in general to achieve its growth target.
With an additional N150bn in total shareholders’ fund soon to be released to the insurance companies, it is expected the industry would experience phenomenal growth as experienced in the banking sector after consolidation.
Since the post-merger results of most insurance companies are outstanding, we have relied on some historical data and certain qualitative issues for the analysis. Our opinion is based on expectation of the selected companies based on their outlooks and strategies they are adopting.
The Insurance Industry
Insurance is the power house of development and the warehouse of economic prosperity. Insurance plays a key role in the financial sector of the nation. Insurance companies perform this onerous task by mobilising small savings from millions of policy holders in the funds to the creation of more wealth through investment in the productive sector of the economy. It also serves as the custodian of the nation’s wealth through the process of indeminification.
In most of the developed economies where the level of insurance awareness is relatively high, the insurance industry is the dominant force in the financial system to the extent that most banks and other financial institutions in such countries are either owed or sufficiently funded by the insurance companies. Modern insurance markets have undoubtedly positioned themselves as major tools for the promotion, sustenance and advancement of the nation’s economies.
Prior to 1961 when the first piece of insurance legislation came into force in Nigeria, insurance business was a free-for-all affair. Some opportunistic investors who had set up insurance companies saw the business as a means to get rich quick. These companies working in concert with some unscrupulous agents found ways to avoid paying valid claim obligations on enforceable insurance contracts. It is widely believed that the activities of these agents, non insurance professionals, who were in direct contact with the market and were largely not held to any particular code of conduct or standard of training by their principals, gave the industry its face that has continued to hunt operators over half a century later. The effort of current day operators to fulfill valid contract obligations notwithstanding, operators continue to struggle with an image problem.
NEM Insurance Plc…… Poised for Growth.
Nem Insurance Plc (NEM) commenced insurance business in Nigeria in 1948 through the agency of Edward Turner & Co and in 1965, became a Nigerian branch of NEM General Insurance Association Limited of London. It was eventually incorporated in 1970 as a Nigerian company in compliance with the Companies Decree of 1968, while disinvestment by the Federal Government led to its public quotation on the Nigerian Stock Exchange in 1989.
•Following statutory induced reforms in the insurance industry in 2006, the company merged with Vigilant Insurance Company Ltd, and is registered to transact all classes of General Insurance.
•Though the company could be regarded as a medium sized insurance company, its bullish tendencies are by no means in doubt. With a mere ten branch network, the management of the company has ensured the strategic location of each of these branches in the major commercial nerve centres of Nigeria.
•Its ambitions to rattle larger sized competitors has led NEM to commence a reengineering process aimed at increasing client satisfaction by enhancing shorter lead time for claim settlement and information dissemination. The company plans to simplify processes and procedures through the use of Information Technology and increasing customer interaction online.
•Though involved in all classes of insurance, NEM has been able to carve a niche for itself in Life & Pension Insurance where it has an array of nine different products namely Personal Pension Plan, Prosperity Plan, University Education Guaranty Plan, Family Income Benefit amongst others.
N.e.m. Insurance plc
From its miniature size in 2005 where the financial year ended in a Loss after tax of N2.267m generated on a turnover of N586.873m, NEM recorded a 45% increase in turnover to N853.557m and a PAT of N8.772m in 2006. A comparison with its 2007 interim results confirm the company’s hitherto miniature size compared to its current status where 3rd Quarter operating results show a N2billion turnover and a PAT of N330.1m. Though a comparison with Cornerstone Insurance Plc, show lower indices over the same corresponding period, (Turnover of N2.344b, PAT of N569.689m), NEM has recorded higher leaps in Turnover and PAT of 225% and 2,285% respectively than Cornerstone’s 18% and 853% growth over the same corresponding period .
NEM has an authorised share capital of N2.5billion, outstanding shares of 5.03 billion while the Shareholders Funds is N3.1billion and the stock opened trading in 2007 at N1.02 and closed trading at N3.92, an appreciation of 284%, having hit an all time high of N6.32 in June, 2007.
STACO Insurance Plc……Ready for growth
STACO Insurance Plc. (STACO) emerged in July 1994 as a result of discrete acquisition and restructuring carried out on Alpha Insurance Plc. incorporated in Nigeria on 10th October, 1991 and subsequently licensed to transact all classes of insurance business. The Company under the new name commenced operations on 1st October 1994 and licensed to underwrite General Insurance Business and Special Risks.
•In a bid to meet the new capital base requirement of N3billion, the company’s authorised share capital was raised to N2.5billion from N400Million while N1.79billion was raised through Private placement taking the shareholders funds of the company to over N3billion.
•The company has a strategic vision to become “Top among five Insurance Companies in Nigeria” by 2010 by increasing its profitability and asset base while providing adequate training and development for its personnel.
•The company also intends to achieve its Vision 2010 by prioritising claims settlement to clients, aggressive product development and emphasis on cost controls and effectiveness.
Niger Insurance Plc……..The industry sleeping giant.
Niger Insurance Plc was established in August, 1962 as a specialist life Company under the name Yorkshire Insurance Company. As a public quoted composite Insurance Company, it presently operates with an asset base in excess of N8 billion and a fully paid-up authorised share capital of N750 million.
•The company has been able to cultivate a legacy of trust and ethical values which it has been able to build upon from its foundation till date.
•The company has recognized the dearth of Insurance presence across Nigeria outside the highly populated urban areas and has gone ahead of its competitors to upcountry locations across the country.
•In its last financial year end the company rewarded its shareholders with a bonus of 1 for 5 and a cash payment of N0.05 per unit of share having achieved a 36% growth in premium and a 106% growth in PAT.
•Its second quarter June 2007 results show an 88.06%(N2.035b) increase in Gross Premium and a 135% (N354m) increase in PAT.
•Going forward, current operating results have surpassed projections and the share price has recorded a 58% appreciation from its January opening price to date.
• Risks to the company’s growth and market dominance could arise from a drop in patronage by government agencies and parastatals, the perception of the company as a sleeping giant, the bullish penetration of the market by hitherto small insurance companies but now recapitalised to fund ambitious expansion plans.
Crusader Insurance Plc………..Highly reputable.
Crusader Insurance (Nigeria) Plc is a highly reputable company renowned for its efficient service delivery and prompt claims settlement. Established in 1956, Crusader Insurance (Nigeria) Plc has a national network of branches and full computerization and a crop of experienced and highly competent professional staff back up its operations.
With a shareholder's fund of about N5.5 billion, Authorized share capital above N4 billion and asset base of about N9 billion, Crusader Insurance (Nig) Plc has a very strong reserve base and it is one of the highly capitalized insurance companies in Nigeria.
Going by the strength of its capital base the company undertakes a wide scope of risk underwriting across including general business, special risks (like Oil & Gas, Aviation and Engineering/Machinery), Individual Life, Group Life and pension benefits plans.
..
The company has also recorded impressive growth over the years and its latest 3rd Quarter September 2007 operating results show a Premium of N1.81b against N1.093 from the same corresponding period, while PAT has increased by over 100% to N576m as against N261m.
..
The company’s opening share price for 2007 was N2.67 while current trading price is N6.70, an appreciation of 151%.
With an additional N150bn in total shareholders’ fund soon to be released to the insurance companies, it is expected the industry would experience phenomenal growth as experienced in the banking sector after consolidation.
Since the post-merger results of most insurance companies are outstanding, we have relied on some historical data and certain qualitative issues for the analysis. Our opinion is based on expectation of the selected companies based on their outlooks and strategies they are adopting.
The Insurance Industry
Insurance is the power house of development and the warehouse of economic prosperity. Insurance plays a key role in the financial sector of the nation. Insurance companies perform this onerous task by mobilising small savings from millions of policy holders in the funds to the creation of more wealth through investment in the productive sector of the economy. It also serves as the custodian of the nation’s wealth through the process of indeminification.
In most of the developed economies where the level of insurance awareness is relatively high, the insurance industry is the dominant force in the financial system to the extent that most banks and other financial institutions in such countries are either owed or sufficiently funded by the insurance companies. Modern insurance markets have undoubtedly positioned themselves as major tools for the promotion, sustenance and advancement of the nation’s economies.
Prior to 1961 when the first piece of insurance legislation came into force in Nigeria, insurance business was a free-for-all affair. Some opportunistic investors who had set up insurance companies saw the business as a means to get rich quick. These companies working in concert with some unscrupulous agents found ways to avoid paying valid claim obligations on enforceable insurance contracts. It is widely believed that the activities of these agents, non insurance professionals, who were in direct contact with the market and were largely not held to any particular code of conduct or standard of training by their principals, gave the industry its face that has continued to hunt operators over half a century later. The effort of current day operators to fulfill valid contract obligations notwithstanding, operators continue to struggle with an image problem.
NEM Insurance Plc…… Poised for Growth.
Nem Insurance Plc (NEM) commenced insurance business in Nigeria in 1948 through the agency of Edward Turner & Co and in 1965, became a Nigerian branch of NEM General Insurance Association Limited of London. It was eventually incorporated in 1970 as a Nigerian company in compliance with the Companies Decree of 1968, while disinvestment by the Federal Government led to its public quotation on the Nigerian Stock Exchange in 1989.
•Following statutory induced reforms in the insurance industry in 2006, the company merged with Vigilant Insurance Company Ltd, and is registered to transact all classes of General Insurance.
•Though the company could be regarded as a medium sized insurance company, its bullish tendencies are by no means in doubt. With a mere ten branch network, the management of the company has ensured the strategic location of each of these branches in the major commercial nerve centres of Nigeria.
•Its ambitions to rattle larger sized competitors has led NEM to commence a reengineering process aimed at increasing client satisfaction by enhancing shorter lead time for claim settlement and information dissemination. The company plans to simplify processes and procedures through the use of Information Technology and increasing customer interaction online.
•Though involved in all classes of insurance, NEM has been able to carve a niche for itself in Life & Pension Insurance where it has an array of nine different products namely Personal Pension Plan, Prosperity Plan, University Education Guaranty Plan, Family Income Benefit amongst others.
N.e.m. Insurance plc
From its miniature size in 2005 where the financial year ended in a Loss after tax of N2.267m generated on a turnover of N586.873m, NEM recorded a 45% increase in turnover to N853.557m and a PAT of N8.772m in 2006. A comparison with its 2007 interim results confirm the company’s hitherto miniature size compared to its current status where 3rd Quarter operating results show a N2billion turnover and a PAT of N330.1m. Though a comparison with Cornerstone Insurance Plc, show lower indices over the same corresponding period, (Turnover of N2.344b, PAT of N569.689m), NEM has recorded higher leaps in Turnover and PAT of 225% and 2,285% respectively than Cornerstone’s 18% and 853% growth over the same corresponding period .
NEM has an authorised share capital of N2.5billion, outstanding shares of 5.03 billion while the Shareholders Funds is N3.1billion and the stock opened trading in 2007 at N1.02 and closed trading at N3.92, an appreciation of 284%, having hit an all time high of N6.32 in June, 2007.
STACO Insurance Plc……Ready for growth
STACO Insurance Plc. (STACO) emerged in July 1994 as a result of discrete acquisition and restructuring carried out on Alpha Insurance Plc. incorporated in Nigeria on 10th October, 1991 and subsequently licensed to transact all classes of insurance business. The Company under the new name commenced operations on 1st October 1994 and licensed to underwrite General Insurance Business and Special Risks.
•In a bid to meet the new capital base requirement of N3billion, the company’s authorised share capital was raised to N2.5billion from N400Million while N1.79billion was raised through Private placement taking the shareholders funds of the company to over N3billion.
•The company has a strategic vision to become “Top among five Insurance Companies in Nigeria” by 2010 by increasing its profitability and asset base while providing adequate training and development for its personnel.
•The company also intends to achieve its Vision 2010 by prioritising claims settlement to clients, aggressive product development and emphasis on cost controls and effectiveness.
Niger Insurance Plc……..The industry sleeping giant.
Niger Insurance Plc was established in August, 1962 as a specialist life Company under the name Yorkshire Insurance Company. As a public quoted composite Insurance Company, it presently operates with an asset base in excess of N8 billion and a fully paid-up authorised share capital of N750 million.
•The company has been able to cultivate a legacy of trust and ethical values which it has been able to build upon from its foundation till date.
•The company has recognized the dearth of Insurance presence across Nigeria outside the highly populated urban areas and has gone ahead of its competitors to upcountry locations across the country.
•In its last financial year end the company rewarded its shareholders with a bonus of 1 for 5 and a cash payment of N0.05 per unit of share having achieved a 36% growth in premium and a 106% growth in PAT.
•Its second quarter June 2007 results show an 88.06%(N2.035b) increase in Gross Premium and a 135% (N354m) increase in PAT.
•Going forward, current operating results have surpassed projections and the share price has recorded a 58% appreciation from its January opening price to date.
• Risks to the company’s growth and market dominance could arise from a drop in patronage by government agencies and parastatals, the perception of the company as a sleeping giant, the bullish penetration of the market by hitherto small insurance companies but now recapitalised to fund ambitious expansion plans.
Crusader Insurance Plc………..Highly reputable.
Crusader Insurance (Nigeria) Plc is a highly reputable company renowned for its efficient service delivery and prompt claims settlement. Established in 1956, Crusader Insurance (Nigeria) Plc has a national network of branches and full computerization and a crop of experienced and highly competent professional staff back up its operations.
With a shareholder's fund of about N5.5 billion, Authorized share capital above N4 billion and asset base of about N9 billion, Crusader Insurance (Nig) Plc has a very strong reserve base and it is one of the highly capitalized insurance companies in Nigeria.
Going by the strength of its capital base the company undertakes a wide scope of risk underwriting across including general business, special risks (like Oil & Gas, Aviation and Engineering/Machinery), Individual Life, Group Life and pension benefits plans.
..
The company has also recorded impressive growth over the years and its latest 3rd Quarter September 2007 operating results show a Premium of N1.81b against N1.093 from the same corresponding period, while PAT has increased by over 100% to N576m as against N261m.
..
The company’s opening share price for 2007 was N2.67 while current trading price is N6.70, an appreciation of 151%.
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