Stocks of Nigerian insurance companies recorded their best weekly performance in more than 6 years on the Nigerian Stock Exchange (NSE) on the back of gains recorded by Linkage Assurance and Nem Insurance, even as market’s bearish sentiment extended to the third straight week.
Despite the market shedding 0.65 percent of its value, the NSE insurance index, which captures the performance of the most-capitalized and liquid insurance companies, surged 8.34 percent to close at 125.65 points at the end-week Friday, June 21, 2019, the biggest gain recorded by the sector since February 2013.
Linkage Assurance plc snapped a four-day winning streak at the Lagos bourse to close at 66 kobo on Friday, bringing its total return for the week to 37.50 percent. As a result, the stock emerged the best performer on the NSE.
Similarly, Nem Insurance, the third-biggest insurance company listed on the NSE by market capitalisation, followed closely having delivered 33.33 percent value for its shareholders in a week, the stock’s best weekly outing since end-week, January 18, 2019. Nem Insurance closed at N2.80, its highest level in 6 months.
Other insurance firms which recorded gains include Law Union and Rock Insurance, Prestige Assurance and the biggest listed insurance firm by market capitalisation, Axa Mansard. The three companies gained 8.70 percent, 8 percent and 1.57 percent to close at 50 kobo, 54 kobo and N1.94 per share, respectively.
Nigerian insurance companies are bracing up for a recapitalisation after the National Insurance Commission (NAICOM), the apex regulator of the sector, in May 2019 directed the industry operators in the country to increase their minimum paid-up share capital within 13 months or forfeit their licences.
The capital base of life insurance companies was raised from N2 billion to N8 billion. General companies got a raise from N3 billion to N10 billion, composite insurance companies’ capital requirement was increased from N5 billion to N18 billion, re-insurance companies was moved from N10 billion to N20 billion.
Linkage Assurance offers individual and group life insurance products as well as non-life insurance products such as motor and casualty insurance, while Nem Insurance provides general and non-life insurance policies.
Checks by BusinessDay on companies’ financials reveal that the issued share capital of Linkage Assurance and Nem Insurance as at end-March 2019 stood at N4 billion and N4.2 billion, respectively.
Linkage Insurance’s gross premium written rose marginally by 2 percent to N2.21 billion in the first three months of this year from N2.17 billion achieved in the corresponding period of 2018.
Although gross premium income for the firm slumped 4 percent to N1.48 billion in the review period, that was not enough to upset the insurance company’s net premium income which increased by 13 percent to N1.06 billion.
This increase contributed to the 17 percent surge in its bottom line to hit N439.2 million in the first quarter of 2019 compared with N375.3 million recorded in the same quarter last year.
Nem Insurance grew its gross premium written by 19.8 percent to N6.79 billion in the first quarter of 2019 from N5.67 billion. The firm recorded 35.19 percent growth to N4.4 billion in its net premium income for the period.
As a result, post-tax profit jumped some 13 percent to settle at N849.5 million from N751.9 million.
OLUWASEGUN OLAKOYENIKAN
