BUSINESSDAY
As insurance companies prepare their full year 2012 results ahead June 30 submission deadline, players are looking forward to a successful business year, even though it anticipates impact of International Financial Reporting Standard (IFRS) compliant.
Though its operation is completely different from the banking sector, it’s optimistic that such positive trend in the banking sector in terms of profitability and returns on investment would also happen in the insurance sector.
About seven banks who have already released their results in line with IFRS shows positive bottom lines and therefore higher capacity to enhance lending and contribute more to economic development.
Insurance companies still have two months to submit their audited annual accounts with the National Insurance Commission (NAICOM) for approval.
Mayowa Adeduro, managing director/CEO, Anchor Insurance Limited noted that even though banking operation is different from insurance because the former enjoys a lot of public confidence, he said the later will also show a positive trend given feedbacks from figures already collated.
He expects that by the time the results are ready, the key fundamentals will definitely look up, including earning per share and return on investment.
According to Adeduro, the oil and gas sector as well as the retail end were the major industry’s revenue sources, pointing out manufacturing lagged behind seriously because there was very little activity in that sector.
“You know that insurance has a lot of attachment to the manufacturing sector and so it’s only when there is increased activity, new investments and full production capacity that there can be insurance activity on the side. But what we have today is under-capacity utilisation, huge unemployment and closure of factories in some cases,” Adeduro said.
“At Anchor Insurance we grew our business in 2012 by 70 percent, from the unaudited result and we hope it will show when all the ‘i’s are dotted and the t’s’ are crossed, and approved by NAICOM.
Wale Onaolapo, managing director/CEO, Sovereign Trust Insurance plc said “most insurance companies would post positive results, but we have to wait for the regulator to approve the accounts to see the impact that adoption of IFRS would have on profitability.”
IFRS are a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board, and so are sometimes confused with International Accounting Standards (IAS), which are the older standards that IFRS replaced. IAS was issued from 1973 to 2000.
The goal with IFRS is to make international comparisons as easy as possible.
Nicholas Opara, acting director, Supervision, NAICOM had said that NAICOM was working out a uniform IFRS template to ensure harmony in the account presentations of companies in the industry.
“Under the existing financial reporting, we have what we call uniform financial reporting standard. We have looked at the basis of accounting presentations and have prepared a format which would be followed by all the operators in preparing and presenting their financial statements. The same thing we are trying to achieve under the IFRS,” Opara noted.
