Stocks of Insurance firms quoted at the NSE are among the most dormant at the floor of the capital market
Stories: Anurika Nwachukwu
Most Insurance stocks at the Nigeria Stock Exchange (NSE) market have remained dormant and at most at the nominal value with just a few insurance companies trading beyond the par value, according to Investigations carried out by The UNION.
However, AIICO, Mansard, ,international Energy insurance, WAPIC and Continental Reinsurance drove the insurance stock market in the midst of dormant stocks.
Stocks of Insurance firms quoted at the NSE are among the most dormant at the floor of the capital market.
This development indicates that the business potentials in the sector is yet untapped.
The financial sector had 21.33 per cent of the total market capitalization of the NSE stocks in April. And of the 21.33 per cent, the insurance sector recorded 0.90 per cent. As expected, this declined in May as the financial sector recorded 20.89 per cent market capitalization with insurance getting a paltry 0.89 per cent.
The volume of shares the sector traded in May was 1,723,127,922 billion Ordinary Shares valued at N1, 036,184,070.24 in 2868 deals.
From the record the insurance company stocks that drove the sector at NSE were AIICO stocks that sold a volume of 83,309,288 shares valued at N88,308,345.23 in 843 deals while Mansard volume of shares traded stood at 36,712,256 valued at N111,671,479.74 in 134 deals.
Also NEM ,international Energy insurance, WAPIC and Continental Reinsurance volume of shares traded were 29,423,317, 118,087,981,224,857,384 and 44,862,048 in 286,103, 912, and 293 deals, valued at N20,516,603.68, N 5 9 , 6 6 5 , 3 2 1 . 6 6 , N123,101,984.61 and N39,982,511.32. Surprisingly Standard Alliance Plc recorded 1,146,154,942, volume of shares traded valued at N573,077,471 in just 59 deals.
Looking at the stocks that broke that jinx of trading above the nominal value, Mansard Insurance Plc as the only company in the sub-sector that traded N3.02 last month compared to N3.00 per share as at April 30, 2015 while AIICO traded at N1.02 as at April and May 2015 respectively.
Others are Continental re insurance, Wapic Insurance Plc, international energy insurance, NEM, and Goldlink insurance Plc that sold 0.94k ,0.52k,0.51k,0.72k and 0.53 per share in April and NO.94k, 0.52k, 0.51k, 0.72k, and 0.53k in May 2015.
The Nigerian stock market has recorded a significant improvement in the first quarter of this year as it recorded a growth of 19.6 percent. It is instructive to note that the sub-sector’s contribution to the Nigerian stock market in the review period was 1 percent.
The value of the shares traded by all the companies in the sub-sector between January and April was N162 billion. Specifically, the sub-sector traded 9 million shares worth N8.418 million in 120 deals.
Only a few of the stocks in the subsector have met the expectations of investors in terms of value addition and returns on investment.
Mansard Insurance Plc is another promising stock in the sub-sector. It is currently trading at N1.09. The highest transaction in the share price of Mansard since last year was N3.05.
Looking at the Q1 2015 financial records of the insurance stocks reviewed ,showed that only 4 insurance companies have released their Q1 financial statement .AIICO recorded the highest premium with N7,940bn, Mansard had N7,020bn, Cornerstone insurance with N2,107bn while Law union and Rock recorded N1312bn.
However on Profit After Tax Mansard recorded N486,021bn, AIICO ad N443,047bn,Law Union and Rock with N283,642bn and Cornerstone recorded N117,885bn.
Stakeholders are of the view that the reason why insurance stocks are either dormant or just managing to sell is because ,some insurance companies do not submit their financial report but prefers to pay fines and this as amounted to the public not having confidence in the insurance sector.
Apparently National Insurance Commission (NAICOM) has been putting up some measures to bring sanity to the sector and make it more viable and acceptable.