By Akunne Chika
In view of the diversification strategies put in place by individual company in order to boost their income,Â Sovereign Trust Insurance Plc (STI) investment and other income recorded an increase of 68 percent in the financial year ended December 2008.
Going by the the various measures adopted by the insurance company to enhance its income and remain competitive, the companyâ€™s net premium income recorded substantial increase of 58 percent- to N3.18billion in 2008 from N2.02billion.
Chief Ephraim Faloughi, Chairman of the company said the company has embarked on cost cutting measures whilst it incurcate the culture of good corporate governance
Faloughi at the 14th annual general meeting held in Lagos said â€œWe have put in place significant internal efficiency measures to reduce cost in areas of our operations.
â€œI am happy to inform you that our company is looking ahead at controlling a significant share of the market in the industry. We have begun the process of re-engineering our business paradigm, â€œhe stated.
Announcing the resulting of the companyâ€™s business outing for the 2008 Chief Faloughi said despite the challenges in the 2008 , sovereign Trust generated gross premium income of N3.81 billion against N2.49 billion it made the previous year.
The heat of the financial meltdown, Faloughi admitted has not subsided. â€œThe global economic developments had impact on Nigerian economy as inflation rate increased from 6.50 percent as at the end of 2007 to 15.50 percent in 2008. Exchange rate of Naira to US Dollar increased from N116.30 at the end of 2007 to N130.75 in 2008. GDP growth rate declined to 5.86 percent as against 6.50 percent for 2007. Credit to private sector declined significantly in 2008.Â the passage of the 2008 Appropriation Bill with the attendant below-average execution was one major issue that affected the performance of the economyâ€.
He said the the global crisis was being compounded by the restive nature of the Niger-Delta region has become a recurrent decimal in our national polity. Governmentâ€™s effort at ensuring that peace and normalcy prevail in the region led to the creation of the Ministry of the Niger-Delta.
The restiveness, the STI chairman noted,Â is yet to abate as cases of abduction and chaos still pervade the area. â€œ:The effect of all of those have been very damaging to economic activity and consequently created a big decline for insurance business as most project handlers have abandoned the area for their safetyâ€.
With profit before tax of N415.66million in 2008 and N407.87million in 2007 and profit after tax of N360.79 recorded in 2008 and N357.79million in 2007
The insurance industry, he stated had experienced a lot of changes in its structure and operations, which were brought about by the dynamics of the environment. â€œFollowing the conclusion of the recapitalization and consolidation exercise in 2007, the industry is now made up of stronger players who are able to underwrite bigger risks and also take advantage of the local content initiative of the Federal â€˜Government in the oil and gas sectorâ€.