News Column

'Insurance Companies Battle Poor Share Prices At NSE'

July 7, 2014

Kayode Ogunwale

Insurance companies at the Nigeria Stock Exchange have continued to record poor performance on the share prices.

Investigation by Daily Trust revealed that 20 insurance stocks trade at par value of 50 kobo which is the lowest a stock can be trading on.

The stocks trading at par value as at Friday last week consisted of African Alliance Insurance, Cornerstone Insurance, Equity Assurance, Great Nigeria Insurance, Guinea Insurance, Consolidated Hallmark Insurance, Investment and Allied Assurance, International Energy Insurance, Lassaco Assurance, Law Union & Rock Insurance and Linkage Assurance.

Others were, Niger Insurance, Regency Alliance Insurance Company, Sovereign Trust Insurance, Standard Trust Assurance, Standard Alliance Insurance, Unic Insurance, Unity Kapital Assurance and Universal Insurance Company.

The poor performance of insurance stocks on the floor of the Nigerian Stock Exchange (NSE) has been attributed to lack of making good returns by many insurance companies.

About 71.43 per cent of the stocks in the sector were trading at nominal value of 50 kobo, while the remaining 28.57 per cent trade as penny stocks.

As at Friday last week, only eight insurance stocks traded above par value. They were Mansard Insurance with share price of N2.70 kobo per share, WAPIC Insurance with N0.85 kobo per share, Continental Insurance with N1.09 kobo, Goldlink Insurance with N0.53 kobo and Mutual Benefit Assurance with N0.54 kobo.

Others were Prestige Assurance with N0.53 kobo, AIICO Insurance triaging at N0.78 per cent and NEM Insurance with N0.83 kobo per share.

Speaking with Daily Trust on telephone, National President, Constance Shareholders'Association of Nigeria, Shehu Mallam Mikali, said poor management was killing the sector and holding down its growth.

That was why investors/shareholders were finding it difficult to invest in the sector, he added.

"No shareholders will invest in stock that will not bring returns, we make our money from share price appreciation and dividend payout but insurance stocks are not doing well in this regards. There is no way I will put my money on the stocks that will not meet up with my expectations."

Similarly, National Chairman of Progressive Shareholders Association of Nigeria, Boniface Okezie, said that investors were not willing to venture into insurance business because it is not lucrative.

"Investors neglect insurance stocks because the companies in the sub-sector have been unable to reward the investors who invested in them well enough.

"Their inability to meet investors' expectations is due to the fact that most of them do not have businesses to generate enough profit that could be used to pay either dividends or bonuses to shareholders."

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: AllAfrica

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