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Insurance stocks have prospect for higher returns as economy improves — CEO Consolidated Hallmark

  1. Stories by Peter Egwuatu
  2. HOW has the insurance industry performed in recent times?

    Well, like other industries, the insurance industry has not performed too well in recent times. The economic situation of the country affected our business. As you know the economic recession hit on many businesses across sectors of the economy. But for us as a company we have tried to turn in some positive results over time that has boosted shareholders’ value. Some investors don’t know that some penny stocks generate higher returns than some stocks with higher market price. Some investors look at the absolute value that is declared as dividend   and do not consider the rate of returns. In fact, some insurance stocks have greater prospect for higher returns as the economy keep improving in the future.   Investors in the market should invest for long term and not short term.

    Now you said your Rights Issue has opened, why should shareholders exercise their rights?

    Eddie Efekoha

    Yes, our right issue opened Monday, October 16, 2017 and to close Wednesday, 22 November 2017. Today, by virtue of performance in 2016, our gross premium has grown from N1 billion to over N6 billion. By way of dividend we have paid dividend not in all the years, but we have paid sufficient dividend in the last 10 years to earn above average mark. We had the opportunity of paying dividend 11 times, but we have paid about 6 times. Cumulatively we have paid over N1.1 billion and remember our capital base is N3 billion. So if cumulatively over this period we have paid N1.1 billion that means also that we have done over 30 per cent by way of returns to shareholders. But beyond that the assets has grown. We have total asset at about N7 billion and net asset is about N4.4 billion at year end, but still again with capital of N3 billion generating a net asset of N4.4billion and in spite of the fact that we have paid about N1.1 billion. Bear in mind that we equally lost money in the capital market. When the market crashed we lost about N800 million. So this is a good investment, and shareholders should take advantage of this offer to boost their returns.

    Are you optimistic that the offer would be fully subscribed given the fact that the economy has not fully recovered?

    As we speak, valuation has been done. The share is valued not less than 83 kobo. We have decided to put it at 50 kobo per share, which is at par value, just to appreciate our existing shareholders, even though we have to bear the cost of transactions. Our advice to our shareholders is for them to pick up their rights because it is a golden opportunity for them.   Of course, we have over 9,000 shareholders; we are not expecting all to take their rights. Therefore, we are encouraging those shareholders who have financial capacity to take more shares to increase their holdings. As we are coming out of recession believing that more people would have been empowered, we believe that many adult people will buy insurance products and be able to buy our shares as we deepen our penetration level.

    How did Consolidated Hallmark Insurance come into existence?  

    In 2007, just on the back of banking consolidation, insurance industries commenced their own.   Some of us did it alone; some of us looked at the larger picture because we felt it goes beyond raising capital. If you raise capital and you don’t have the people, then of course the capital will just remain idle and you may not be able to deliver the service.   For us, much as we are on threshold of raising the money, we still felt it was better to combine our operations and we decided to look for other partners and we found two in order to meet the capital requirement and at the same time meet our own set agenda of running the business.   So three companies came together and merged and these companies as it were then are:   Consolidated Risk Insurance Plc, Hallmark Assurance Plc and Nigeria General Insurance Company Limited. They merged to form what is known today as Consolidated Hallmark Insurance Plc.

    When was the company listed on the Exchange?

    Before 2007, we were not listed on the Nigerian Stock Exchange, NSE, but sometime in February, 2008, we decided to list on the Exchange. We needed to list our shares so that shareholders will have the freedom to trade on their shares by selling if they needed cash.   So, we then listed. In 2008, it was the boom era; we listed at N1.80 kobo and within a short period the share price move up to N4.32kobo. But all of a sudden the price moved the other way round when the market crashed.   Of course the insurance industry suffered, but the investors never discriminate between the good and bad ones, but notwithstanding some of us still exist. Now, we have grown our business taking few advantage of the synergy from all of the merging partners.

    How has your regulator, NAICOM been able to handle the insurance industry?

    National Insurance Commission, NAICOM has been trying its best in taking the industry to higher level in tandem with international best practice. They have been turning out policies and guideline on various products. Also, NAICOM is considering Micro insurance operation guideline and they gathered us together to seek our input on Micro Insurance operation guideline. The market has made input; we believe that before the end of the year, something will come out of it. For us as a company that has the licence to do general business, we are qualified and we have applied for it to do micro life. It has been our plan to do the micro business.



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