By Patience Saghana
Royal Exchange Plc group announced a gross premium income of N3.3 billion in 2008 financial year.
The N3.3billion posted as at December 2008 was a significant increase from N2.7 billion the company generated in 2007.Â Expenses for the period leaped to N1.492 billion from N740.65 million the previous year, as a result of N1.16 billion management expenses which shareholders condemned in totality.
This resulted in a loss before tax of N1.54 billion, compared with the profit before tax of N775.41 million for the corresponding full year of 2008, after which taxation of N896.463 million brought loss after tax to N2.44 billion, from a net profit of N647.14 million.
The insurance companyâ€™s loss for the year could have been fuelled by exceptional items of N1.4 billion, which comprised expenses on de-merger, of N95.95 million, Rights Issue expenses of N24.55 million, re-branding expenses of N16.96 million, provision for doubtful balances (fees it is not sure of collecting) of N995.01 million and â€˜arrears of PAYE (pay as you earn) and withholding taxes which amounted to N242.01 million.
This represented a loss per share of 66 kobo, from earnings per share of 19 kobo recorded the previous year.
Its shareholdersâ€™ funds also slipped by 49% to N6.084 billion in the year under review, from N11.916 billion achieved in the preceding year. Mr. Kenneth Odogwu, chairman of the company at REANâ€™s 40th annual general meeting held in Lagos recently, said that in 2008 the group successfully completed the merger of the general insurance and life assurance divisions into separate, wholly owned subsidiaries and we also consolidated the results of the new healthcare and finance house subsidiaries into the group results.
Odogwu explained, â€œoverhead expenses in 2008 totalled N1.49 billion, up from N741 million in 2007, as a result of a provision for doubtful asset balances of N99 million and a charge of N86 million for the diminution in the value of our quoted equity portfolio. Management expenses increased to N1.16 billion, a 76 per cent increase over 2007, but in line with the consolidation of the new healthcare and finance subsidiaries for the first time. A loss before tax and exceptional items of N165 million is reported for the group.â€
He explained further that the company undertook a number of strategic initiatives aimed at positioning the company as a broad based financial services provider. â€œDespite a very difficult and challenging 2008, your board remains extremely confident of the future. The repositioning of the Royal Exchange group will be largely completed in 2009, and thereafter, it is expected that profit performance will become more robust and resilient and in an environment of greater risk diversification.â€
According to him, work on upgrading the groupâ€™s corporate governance and risk management framework will continue aggressively into 2009. The branch network will be upgraded as we seek to refresh all our outlets in line with our new corporate identity and brand strategy.
Seven new branches will also be opened in 2009 to increase total outreach and focusing on land expanding all private business lines, he said.