NigeriaN Stock Exchange (NSE) all-share index (ASI) and market capitalisation ended the week lower by 0.65% to close at 27,577.52 points and N9.473 trillion respectively. “Similarly, all other Indices finished lower during the week, with the exception of the NSE Main Board Index, NSE Insurance Index, NSE Consumer Goods Index and the NSE Pension Index that  appreciated by 0.01 percent, 0.12 percent, 0.50 percent and 0.26 percent respectively while the NSE ASeM Index closed flat,” according to reports from the NSE weekly stock market update. The update affirms that at the close of the week’s trading on the Nigerian bourse, a turnover of 1.183 billion shares worth N10.300 billion in 16,522 deals were traded last week by investors compared to a total of 1.115 billion shares valued at N13.817 billion that exchanged hands last week in 16,083 deals. The NSE weekly update further affirmed that the Financial Services Industry (measured by volume) led the activity chart with 1.015 billion shares valued at N7.136 billion traded in 11,012 deals; thus contributing 85.83 percent and 69.28 percent to the total equity turnover volume and value respectively. According to the NSE, the Conglomerates Industry followed with 69.777 million shares worth N473.308 million in 564 deals. The third place was occupied by the Services Industry with a turnover of 42.223 million shares worth N75.881 million in 202 deals. Trading in the shares of Nigeria’s top tier lenders, United Bank for Africa Plc, Guaranty Trust Bank Plc and financial HoldCo, FBN Holdings Plc (measured by volume) accounted for 444.004 million shares worth N4.958 billion in 4,153 deals, contributing 37.53 percent and 48.13 percent to the total equity turnover volume and value respectively. Also traded during the week were a total of 943 units of Exchange Traded Products (ETPs) valued at N1.357 million executed in 28 deals, compared with a total of 29,242 units valued at N283,495.57 transacted in the previous week in 42 deals. A total of 9,140 units of Federal Government Bonds valued at N9.198 million were traded in 6 deals compared to a total of 4,470 units of Federal Government Bonds valued at N4.313 million transacted in the preceding week in 8 deals. A summary of price changes in the review period shows 24 equities gained in price during the week, lower than 28 traded the previous week. On the contrary, 38 equities lost in price, higher than 31 reported last week, while 118 equities remained unchanged lower than 121 recorded in the preceding week. The current state of Nigerian economy, which recently slipped into recession, has reawakened strong reasons why the populace and authorities should key into insurance. This is because the greater number of the population are under daily threat from not only risks emanating from natural disasters such as floods and rainstorms, but also security risks like the threat of Boko Haram, kidnapping and other heinous crimes, which are taking their tolls on the populace on a daily basis. Despite the contribution of the sector to the nation’s economy, shares of insurance companies quoted on the official list of the Nigeria Stock Exchange, unlike other sub- sectors of the economy, rather than appreciating in value, have remained relatively stagnant, even as a larger percentage of the companies have remained at the nominal price of 50 kobo at which they were quoted. Challenges of poor power supply, weak infrastructure, the continuing insurgency in the North East and the activities of the Niger Delta militants have contributed in no small measure to slow down the pace of growth in the industry and the general economy at large. As a developing nation, the challenges for Nigerian insurance companies also include enforceability of insurance regulations and the inability of the sector to be creative in terms of product offerings. However, the effective enforcement of the regulations on premium collection and remittances by the National Insurance Commission (NAICOM) has resulted in dramatic improvement in the cash flow of insurance companies. The results for the industry are progressive in nature and the evidence is clear that while premium growth remains modest, growth in investment income is remarkable and resonated with insurers. The situation is expected to improve further because there are more compelling reasons why the nation’s citizenry as well as governments should take insurance more seriously. Since the crash of the nation’s capital market in 2008, negative perception has trailed the subsector compounded by the inability of more than 85 per cent of the firms to pay dividend to shareholders. Market watchers linked the inability of the sub- sector to rise above the nominal level to crisis of confidence, which, according to them, the few ones that raised high expectation for good results ended up with negative bottomline. There fear is that investors are not likely to see any dramatic upswing to movement in the price of insurance stocks in spite of regulatory efforts. According to them, insurance mirrors the economy and if the economy does not produce new manufacturers, grow existing ones, SMEs sector remains stifled, and supply chain to tap micro insurance not developed, there would be no significant growth in the industry.Royal Exchange Plc as one of the companies that have got fair share of the rough economy has also remained at nominal level in share price. The insurance firm has witnessed fluctuations in financials in the last two quarters of 2016, with the first quarter results showing green light, just as the premium income also improved. Like most of its peers in the industry Royal Exchange’s share price on the Nigerian Stock Exchange has remained stagnated at nominal value of 50 kobo year- to-date, following negative sentiments that have enveloped the demand of most insurance By Kehinde Ibrahim, Lagos Business stocks. The group had ended the financial year 2015 in the negative note as the year saw a loss after tax of N1.298 billion as against a profit after tax of N304.730 million recorded a year earlier. Royal Exchange Plc ended the financial year December 2015 billion as against a profit after tax of N304.730 million recorded a year earlier. The group, in a filing with the Nigerian Stock Exchange, also reported a loss before tax of N896.961 million in contrast to profit before tax of N139.540 million in 2014. The company’s gross premium written stood at N10.790 billion during the period under review from N9.425 billion reported in 2014. Royal Exchange began the year 2016 in an impressive note with 326.96 per cent growth in profit after tax for the first quarter ended March 31, 2016. The insurance firm posted a profit after tax of N154.714 million for the first quarter ended March 31, 2016 as against N36.236 million recorded a year earlier, accounting for a growth of 326.96 per cent. Also the group reported a profit before tax of N227,520 million in contrast to N50.670 million in 2015, an increase of 349 per cent. However, the company’s earnings returned to the limbo as the group posted 20 per cent drop in profit before tax for the second quarter ended June 30, 2016. Royal Exchange reported a profit before tax of N251.672 million for the second quarter as against N314.975 million recorded a year earlier, accounting for a drop of 20.09 per cent. However, the group reported a profit after tax of N171.138 million in contrast to N170.242 million in 2015, a marginal increase of 0.53 per cent. However, the group came in with an appreciable leap in premium income a signal that customers are patronising the company’s products, in spite of tough operating environment. For the first six months through June 2016, Royal Exchange’s gross premium written increased by 34.31 per cent to N8.43 billion from N6.27 billion as at June 2015. Gross premium income moved by 17.40 per cent to N6.45 billion in June 2016 as against N5.50 billion in June 2015. Net premium income moved by 5.24 per cent to N4.33 billion in June 2016 from N4.12 billion as at June 2015. Experts say the impressive at the top lines means the company’s underwriting performance is efficient. Total Net Claims paid for the period under review amounted to N1.95 billion, an increase of 42 percent from half year 2015, which was N1.37 billion. Commenting on the results, Group Managing Director of the company, Alhaji Auwalu Muktari, said: “The half year results on the top-line items witnessed significant growth which shows that Royal Exchange as an insurance group, is focusing on its growth objectives set out at the beginning of the year, by participating in large-ticket financial transactions, as well as playing in the retail insurance market.” According to Muktari, “despite the very harsh operating environment being witnessed in the Nigerian economy today, we are greatly optimistic that by focusing our efforts on aggressive sales of our various product and service offerings, increasing our presence and participation in the retail sales space, reducing our operating costs profile and embarking on various expense optimisation strategies, we will be able to surpass our financial targets set for ourselves at the beginning of the year.” One of the key growth strategies for Royal Exchange Plc, according the GMD, is the proposed listing of a N3 billion bonds on the floor of the Nigerian Stock Exchange. Muktari said that in line with the on-going reforms being undertaken by the regulator, NAICOM, there is a need for fresh capital to enable Royal Exchange take advantages of the coming opportunities that will arise in the course of the reforms taking place. He further added: “Royal Exchange will, in the years to come, continue to be an aggressive player in the retail market in Nigeria and will be looking at different strategies to increase its product offering and visibility in the marketplace, while not losing track of the corporate market, where the returns and margins, are dwindling.”

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