- Stock Exchange Suspends Trading on Unic Insurance
The Nigerian Stock Exchange (NSE) has placed UNIC Insurance Plc on full suspension, following approval of the scheme of arrangement that will lead to a restructuring of the insurance company under an investment holding company.
Full suspension disallows both trading and price movement on a particular stock unlike technical suspension which allows trading without price movement.
The NSE stated that the full suspension was in compliance with the process required for the approved scheme of arrangement between UNIC Insurance and shareholders of the insurance company.
Already, the NSE has approved the rearrangement of UNIC Insurance under a new core investor and shareholding structure. The restructuring will allow the ailing insurance company to access capital through a new core investor.
The scheme of arrangement included the plan by South Africa’s Liberty Holdings to acquire 75 per cent majority equity stake in Unic Insurance Plc for 160 million Rands, about $12 million and an equivalent of N3.72 billion. Liberty Holdings is an investment holding company and it already has investment in the Nigerian market through Total Health Trust.
Chief executive officer, Liberty Holdings, Thabo Dloti recently outlined the group’s plan to expand into East and West Africa regions as part its strategy to grow its presence in West Africa through long-term insurance business and asset management business.
“It may be having difficulties now, but everything indicates to us that in the long term Nigeria is going to be a big contributor of growth if you are doing business in Sub-Saharan Africa,” Dloti said.
With more than five decades of operations, UNIC Insurance has struggled with declining performance in recent years. Like most insurance stocks, it has stagnated at its nominal price of 50 kobo at the NSE.
Many analysts saw the merger and acquisition deal between UNIC Insurance and Liberty Holdings as a possible boost for the two companies.
Although relatively low turnover-to-net assets ratios of most insurance companies may on one hand imply underutilization of shareholders’ resources, these also indicate significant headroom for underwriting capacity and growth on the other hand.
Most analysts believe there is still much growth potential in the Nigerian insurance industry. From government to the National Insurance Commission (NAICOM) and to operators, insurance stakeholders have recently taken major steps to enliven the performance of the industry. The passage of the Nigeria Content Development Act and other laws on compulsory insurance by government has opened up tremendous business opportunities for insurance companies. The Local Content Act requires that all insurance risks associated with oil and gas sector including prospecting, exploration, drilling, constructions, shipping, distribution, marketing and transportation must be insured in Nigeria with registered Nigerian insurance company. This law alone represents immense opportunity for well-capitalised and stable insurance companies.
Besides, NAICOM has also in recent period taken many far-reaching and proactive steps to standardize insurance operations and enforce conformity with best practices. NAICOM has introduced new accounting standards with more stringent provisions to ensure that insurance profit and loss accounts and balance sheet showed the true state of affairs. Insurers are also expected to make timely rendition of accounts, making their returns more predictable. With the broad provisions of the Insurance Act and related NAICOM guidelines, the tough stand of the insurance regulator has greatly improved the operating environment. The industry regulator is also leading the charge for compliance with existing compulsory insurance laws.
Although still a highly fragmented industry with some 51 insurance companies, well-managed quoted risk companies stand to benefit both in the event of industry consolidation or market-driven competitiveness that places premium on security of insurance rather than lower rates. With estimated penetration of some seven per cent, Nigeria’s large population and expansive economy also put insurers on good footings.
Rising Operating Costs, Exchange Rates, Service Charge Increased Airfares by 100%
Price of air tickets rose by 100 percent across several routes as rising operating costs, high foreign exchange and surged in service charge forced airline operators to raise airfares.
Airlines attributed the increase to a series of price adjustments and the introduction of new fees by the Federal Airport Authority of Nigeria (FAAN). According to them, airline firms were given special concessions, which will continue to push price up and could hit an average of N100,000 for even the Lagos/Abuja route.
Speaking on the situation, Captain Ado Sanusi, the Managing Director of Aero Contractors, said airline companies could not access forex at the official rate while the FAAN had upped its fees.
He said “We were buying dollars at N360 and it went to N380 but you can’t get it for less than N480.
“We are paying VAT at 7.5 per cent. We are paying 15 per cent duty on our spare parts. The boarding passes, we pay 15 per cent duty on it.
“The passenger service charge has increased by FAAN. So, don’t look at one component but look at the total reason for the increase.
“Yes, there is an increase in demand but it is caused by the lack of aircraft and this lack of aircraft is caused by unavailability of spare parts which is also caused by dollar scarcity.”
Tony Elumelu Receives Licence to Kick Start Heirs Insurance Limited, Heirs Life Assurance Ltd
The Chairman of Heirs Holdings, Tony O. Elumelu, on Friday said the company has received operating licences from the National Insurance Commission (NAICOM) for its two new insurance companies, Heirs Insurance Limited (HIL) and Heirs Life Assurance Limited (HLA).
The Chairman disclosed this on his social media page.
In his words, he said “I am proud to announce that the Nigerian Federal Government, through the insurance regulator, the National Insurance Commission (NAICOM), has officially issued the operating licences for our new Group insurance companies – Heirs Insurance Limited (HIL) and Heirs Life Assurance Limited (HLA).
“This represents an important milestone of a long-term strategic journey in providing much needed, quality, & valuable financial services, to a broad demographic in Nigeria. Insurance should not be a luxury, and just as we have democratised other sectors, we will democratise insurance – applying our tried & tested business philosophies.
“Fueled by the determination to improve lives & leave a legacy in the African private sector, we have embarked on this journey to revolutionise the insurance space – deploying technology, customer understanding & operational excellence.
“It has been a five-year journey, but with the optimism & the resilience that have brought us this far, it has been worth the wait.
“I would like to warmly thank our new CEOs—Dr. Adaobi Nwakuche, MD/CEO of Heirs Insurance and Niyi Onifade, MD/CEO of Heirs Life Assurance, our Board members, regulatory partners, those who have believed in this dream, despite the obstacles, & those who have cheered us on.”
This is coming barely two weeks after Mr. Elumelu announced Transcorp has acquired Afam Power for N105 billion.
Ndubuisi Ekekwe Moves to Deepen Capabilities Through Free Weekly Business Lessons
In a bid to deepen business and individual capabilities across the African continent, Prof. Ndubuisi Ekekwe, Founder of Fasmicro and the Lead faculty, Tekedia Institute, on Sunday said he will commence free business lessons to enhance accumulation of capabilities.
In a message forwarded to all members of the platform, Tekedia.com, Prof. Ekekwe, explained that when businesses accumulate capabilities, they move upstream and create new competitive tentacles which eventually form the foundation of their growth.
“More so, because of the capabilities, they protect their market shares through strategic moats against competitors and new entrants,” he stated.
Prof. Ekekwe plans to send out two business lessons per week to engage Tekedia’s growing community on the mechanics of business systems. “Each piece would be prepared to pass across a business lesson.”
Prof. Ndubuisi Ekekwe writes regularly in the Harvard Business Review and has spoken at global events — explaining and teaching the mechanics of business systems and nation-building.
To start receiving his free business lessons sign up here.
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