Investors put their money in a company when they think the future is bright for that given company. They want to invest as soon as possible to reap maximum profit.
It is crystal clear like the morning moon that the insurance sector has performed below par as evidenced by their slim margins, accumulated losses and a stock price that has been stuck at N0.50 for over 3 years.
This suggests management and boards of directors have failed in their primary responsibility of maximizing the wealth of owners.
We decided to highlight the lists of insurance stocks investors should avoid like plague.
This company recorded a loss after tax of N1.36 billion as at December 2016 while accumulated losses in the balance sheet stood at N1.83 billion. It last paid dividend to shareholders in 2013.
Sovereign Trust Insurance
The Nigerian insurers has had stock price at N0.50 for in the past three years and it has not paid dividend for several years.
STI was one of the 17 companies suspended from trading for late submission of results. The company has also failed to pay dividends in several years.
For the year ended December 2016, Sovereign Trust’s net income dipped by 95.71 percent to N23.59 million from N557.84 million the previous year.
The company posted a loss after tax of N1.85 billion to end 2016 financial year while it recorded negative retained earnings of N4.97 billion.
The company has released its 2016 audited financial statement that showed it posted a loss after tax of N1.73 billion while stock price has been stagnated at N0.50 in the past three years.
International Energy Insurance
IEI is run by an interim management the company has been recording recurring losses for several years. It has an accumulated loss of N14.07 as at September 2016 while negative shareholder’s fund stood at N2.755 billion.
It is unsurprising that the share price of Equity Assurance has been stock at N0.50 because its quarter on quarter losses has eroded margins and market value.
The company posted a loss after TAX OF N407.67 million in December 2016 while accumulated losses stood at N3.81 billion the same period.
Universal Insurance was one of the 15 firms suspended by the NSE for non-submission of its 2016 audited results. The company’s shares have also remained at the 50-kobo mark. The company has made negative retained earnings of N2.62 billion and a loss of N186.85 million as at December 2015.
The last time the company released its audited financial statement was in 2015 when it recorded a loss after tax of N1.02 billion and negative reserve of N3.20 billion.The company has also not paid dividends for several years.
Guinea Insurance’s stock has been trading at N0.50 since 2013, as it returned to profitability by posting a profit of N2.25 million as at December 2016, tough abysmal. It has a negative retained of N940 million, which hampered its ability to pay dividend.