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GCR Assigns Lasaco Assurance Plc Stable Outlook A-(NG)

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Lasaco Assurance - Investors King

GCR Ratings (“GCR”) has assigned an initial national scale financial strength rating of A-(NG) to Lasaco Assurance Plc, with a Stable Outlook.

Rated Entity / Issue Rating class Rating scale Rating Outlook / Watch
Lasaco Assurance Plc Financial strength National A-(NG) Stable Outlook

Rating Rationale

The rating accorded to Lasaco Assurance Plc (“Lasaco”, “the insurer”) reflects the insurer’s moderately strong financial position, which partly offsets its limited competitive position in the highly fragmented Nigeria insurance industry.

Lasaco’s competitive profile somewhat constrains the rating. Lasaco is a mid-tier composite player within the Nigerian Insurance industry, with a track record of over four decades. The insurer controls an estimated market share and relative market share of 2.2% and 1.2x respectively as at FY20 based on total gross written premiums (“GWP”) of the industry. The premium base is somewhat concentrated, with group life business dominating premium mix over the review period with 60% contribution. This is somewhat offset by a diversified portfolio in the short-term business, with four lines of business contributing over 10% to the gross premium base. Going forward, the insurer’s competitive position is expected to be maintained within the same range, supported by entrenched market relationships with intermediaries and policyholders.

Earnings are at an intermediate level, with net profit supported by market sensitive income. In this regard, profitability in FY20 is underpinned by investment income and the highly volatile foreign exchange (“FX”) gains. Characterised by the low yield environment in 2020, largely due to the pandemic, investment income declined notably by 24.2% year on year (“YoY”) in FY20. This, coupled with an increase in net claims during the year, resulted to a moderation in operating margin. Looking ahead, given the strategic plans put in place, we expect planned premium growth to improve portfolio quality and support the volatile investment income, which in turn should result in earnings stability.

Lasaco’s capital adequacy is a positive rating factor. Though a slight 2.2% YoY decline in capital was reported at FY20 due to revaluation losses, capitalisation metrics remained strong. Both the international solvency and GCR capital adequacy ratio (“CAR”) were maintained well above 100% and 2.5x respectively over the review period, evidencing good loss absorbing capacity. The insurer plans to increase its shareholders’ funds by about N10bn over the medium term to enable participation on big policies, support business growth, and better position the insurer. This could be supportive to the rating should it be successfully implemented, with evidence of good capital management structures.

Liquidity is assessed within a relatively low range, given the fact that investment properties constitute about 22.5% of the investment portfolio at FY20 (FY19: 26%). That said, cash and stressed assets coverage of net technical liabilities registered a moderation to 1.3x at FY20 (FY19: 1.7x) due to cash absorption by reinsurance receivables. Similarly, operational cash coverage moderated to 10 months (FY19: 13.5 months), pressured by a spike in net claims incurred. Liquidity metrics are expected to improve over the near term based on the planned capital injection.

Outlook Statement

The Stable Outlook reflects GCR expectation that Lasaco will defend its competitive position as it deepens its relationship with the Lagos State, being the major shareholder. GCR expects the planned capital raise to improve the liquidity position over the next 12-18 months, while investment properties generate healthy returns for the insurer. we expect planned premium growth to improve portfolio quality, and support the volatile investment income, which in turn should result in earnings stability.

Rating Triggers

Positive rating action may stem from sustained improvement in earnings supporting a strengthening in liquidity and/or capitalisation. Conversely, a negative rating action could be triggered should investment property continue to dominate the investment portfolio without generating returns, with liquidity metrics moderating further. In addition, a sustained weakening in capitalisation and loss of market share would be negatively considered.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Cornerstone Insurance PLC Announces Delay in Filing Q2 2024 Financial Statements

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Cornerstone Insurance PLC, a prominent player in Nigeria’s insurance sector, has informed shareholders and stakeholders about a delay in filing its Unaudited Financial Statements for the second quarter (Q2) of 2024.

This delay, as disclosed by the company, stems from unforeseen challenges related to the implementation of the International Financial Reporting Standards (IFRS) 17.

The company, in a statement released today, cited that the introduction of IFRS 17 Accounting Standards necessitated significant changes in reporting methods.

These changes, in turn, disrupted the audit process and consequently delayed the preparation of the Q2 Unaudited Accounts.

Cornerstone Insurance PLC’s Audited Accounts and Financial Statements for the year ended December 31st, 2023, have already been filed and approved by the regulatory bodies.

However, the transition to IFRS 17 has posed unexpected hurdles, causing setbacks in the timely preparation of subsequent financial reports.

In response to the delay, Cornerstone Insurance PLC has sought and obtained approval from the Nigerian Exchange Limited (NGX) to extend the deadline for filing its Q2 Unaudited Financial Statements.

The company expressed regret over the inconvenience caused by this delay but assured stakeholders of its commitment to ensuring the submission and publication of the Q2 Financial Statements by August 31st, 2024.

The delay announcement comes amid efforts by regulatory authorities to enhance financial reporting standards across Nigeria’s corporate landscape.

Cornerstone Insurance PLC remains dedicated to meeting regulatory obligations while maintaining transparency and accountability in its financial disclosures.

Investors and stakeholders are advised to monitor further updates from Cornerstone Insurance PLC as the company works diligently to finalize its Q2 2024 financial reporting process.

For more information and updates, shareholders can visit Cornerstone Insurance PLC’s official website or contact the company’s investor relations department directly.

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Sanlam to Acquire 60% Stake in MultiChoice’s Insurance Arm for R1.2bn

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South African insurance giant Sanlam Limited has announced plans to acquire a 60% stake in NMS Insurance Services (NMSIS), the insurance subsidiary of pay TV operator MultiChoice Group, for R1.2 billion.

This strategic acquisition aims to enhance Sanlam’s footprint in the African insurance market and leverage MultiChoice’s extensive subscriber base across the continent.

In a joint statement released on Tuesday, both companies revealed that the deal includes a long-term commercial arrangement designed to expand insurance and related financial services to MultiChoice’s diverse audience.

The transaction also features a performance-based cash earn-out potential of up to R1.5 billion, contingent upon the gross written premium generated by NMSIS by the end of 2026.

Paul Hanratty, CEO of Sanlam Group, expressed optimism about the acquisition, stating, “This partnership provides a unique opportunity to combine our market presence and technological capabilities, fostering growth and market penetration while creating synergies beneficial to all stakeholders.”

Calvo Mawela, CEO of MultiChoice, highlighted the strategic significance of the collaboration, noting, “This deal not only enhances the value we provide to our subscribers but also taps into Sanlam’s expertise to drive innovation and growth in our insurance offerings across Africa. It’s a testament to the hard work and dedication of our teams.”

NMSIS has shown impressive growth, with gross written premiums increasing by 36% year-on-year and profit after tax rising by 51% in the first quarter of 2024.

MultiChoice plans to use the proceeds from the sale for working capital while retaining a 40% interest in NMSIS.

The move comes as MultiChoice faces economic challenges, including a 13% drop in subscribers in key markets such as Nigeria, Angola, Kenya, and Zambia due to economic hardships and currency devaluations.

Despite these setbacks, the partnership with Sanlam is seen as a strategic step to bolster its financial services offerings and stabilize revenue streams.

The announcement also follows recent regulatory developments, with MultiChoice entering a Cooperation Agreement with Groupe Canal+ SA after Canal+ acquired a 45.20% stake in MultiChoice, necessitating a mandatory offer under South African takeover regulations.

As the African insurance market continues to grow, Sanlam’s acquisition of a significant stake in NMSIS positions both companies to capitalize on emerging opportunities, providing innovative insurance solutions to millions of customers across the continent.

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Heirs Insurance Group Unveils Revolutionary Website for Seamless Insurance Experience

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Heirs Life Assurance- Investors King

Heirs Insurance Group has launched a website designed to revolutionize the insurance experience for its customers.

With a focus on simplicity, accessibility, and personalized service, the new website aims to streamline the process of obtaining insurance coverage and empower customers to make informed decisions about their insurance needs.

The website boasts a range of innovative features that make navigating insurance options easier than ever before.

From simple and intuitive navigation menus to personalized insurance recommendations, the website is designed to guide customers through every step of the insurance process quickly and efficiently.

According to Ifesinachi Okpagu, the Chief Marketing Officer of Heirs Insurance Group, the new website embodies the company’s commitment to delivering exceptional customer service.

“Today’s customers want simplicity, and this new website delivers on that request,” Okpagu said. “We are empowering customers to take control of their lives, their businesses, assets, and their most cherished people.”

One of the key features of the website is its personalized insurance experience, which takes customers through a short journey to help them identify the best insurance plan for their needs.

Whether customers are looking for coverage for their home, car, business, or loved ones, the website provides tailored recommendations to ensure they find the right insurance solution quickly and easily.

With its user-friendly interface and innovative features, the new website from Heirs Insurance Group sets a new standard for the insurance industry, making it easier than ever for customers to protect what matters most to them.

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