Low patronage, coupled with little or no insurance culture of Nigerians have continued to affect performance of the insurance sector.
Performance of insurance companies’ in the first half of 2016 showed that the sector is negatively affected by those known challenges of the past.
With majority of the insurance companies listed on the NSE trading at par level of 50 kobo per share, a number of them had formally applied and received the approval of the Quotations Committee of the NSE to raise funds.
Specifically, Standard Alliance Insurance Plc plans to raise N553 million through the placement of 2.2 billion ordinary shares of 50 kobo each at 25 kobo per share, representing half of the current market price.
With total outstanding shares of 11.993 billion, the special placement will represent 18.44 percent of the current total issued shares.
Analysis of the results of 17 listed insurance companies that have filed their half year 2016 reports out of 25 listed insurance companies, showed that total profit dropped by 12 percent to N8.7 billion from N9.8 billion made in 2015.
With a profit after tax growth of 798 percent, Wapic Insurance had the highest growth during the period from N18.8 million to N168.6 million, while Standard Alliance with a profit after tax of N247.8 million suffered the highest profit decline by 50 percent from N496.3 million in 2015.
Meanwhile, many shareholders have expressed worry over the dismal performance of the sector in terms of little or no dividend payment, right issue or stock price appreciation.
President, Renaissance Shareholders’ Association, AMB Olufemi Timothy who spoke on how he had been coping with the underperforming sector said, “I retain my shares in the insurance sector because of anticipated future prospect.
“Our Concern now is the Nigerians apathy to insurance policy. If 50 million Nigerians can have one type of policy or other, then, returns on investments will be great, but now only few take insurance seriously.”
Olufemi expressed the belief that insurance policies could yield sufficient returns that will in turn translate to earnings for the shareholders when government start promoting them.
Mr Adebayo Adeleke, a shareholder and General Secretary of Independent Shareholders Association of Nigeria also lamented the lack of capital appreciation in the sector.
Adeleke who has shares of all insurance companies listed on the local bourse said it was sad that the sector had been performing poorly in dividend payment, capital appreciation and real term growth.