Peter Egwuatu
21 May 2008
Lagos — Custodian and Allied Insurance Plc has assured various stakeholders that its mission of becoming one of the top three insurance companies in Nigeria by 2010 was still on course and well on track.
The company, last week held its first Annual General Meeting (AGM) as a publicly quoted company on the Nigerian Stock Exchange (NSE), where large numbers of shareholders and other stakeholders including the press turned out, unlike in the past when the company was a private entity with scanty shareholders normally in attendance .
The Chairman of the company, Chief Michael Ade Ojo who presided over the meeting were confronted with comments and various intricate questions on how the company fared in the financial year ended December 31, 2007.
Shareholders of Custodian and Allied Insurance Plc at the AGM commended its board and management for the impressive results recorded for the financial period ended December 31, 2007, even as they advocated a debt recovery exercise.
The shareholders at the meeting which was the13th AGM since the inception , stated that the results for the financial year under review was satisfactory but demanded that the company should commence an immediate move to recover some of its debt from debtors.
According to Mr. Owolabi Peter, a shareholder who spoke the minds of other shareholders said "Our results is good and we commend the board, management and staff for the performance .We dislike the rate at which our debt is growing and the company should take action towards the recovery of the debts.
The provision for doubtful debt grew higher from the previous year and also the bad debt written off is not a good development for the company. We also thank the Board for the dividend proposed but we hope higher dividend will be paid next year."
He further advised that the Registrar of the company should commence early distribution of financial statement to shareholders by next meeting. " My annual report was just received today at the AGM. This report is supposed to reach shareholders at least 21 days before the AGM".
Another shareholder, Mr. Lazarus Onwuka, commended the board and management for the results under review but lamented on the increasing rate of debt and expenses incurred by the company.
According to him " We should commence debt recovery exercise and also reduce the amount of our expenditure. The management expenses is on the increase and other expenses. This is not good for the company. The management should strive to see how it could get more businesses for the company in order to reflect on the bottom line.
Responding Ojo said " Distinguished shareholders, ladies and gentlemen, I feel highly honoured to welcome you all to the 13 ' Annual General Meeting of our company and to present to you the reports and accounts for the year 'ended 31" December, 2007. You will note that this year is the first full financial year as a consolidated entity following the reforms in the industry".
He commended the shareholders for their support, saying " All their inputs would be considered".
According to him " It is normal to make provision for bad debt. This does not mean that we are being owed. The law allows us to make adequate provision for bad debt. As our activity increases we must make provision for bad debt. We the board has integrity to protect. We would continue to pursue businesses that will continuously yield profit to the company".
Commenting on the business environment under which the company operated he said " The country experienced the first change in her civilian leadership through a democratic process which witnessed the first civilian to civilian transition, thereby culminating in the swearing in of a new President and Commander in Chief of the Nigerian Armed Forces on May 29 2007, amidst high hopes and expectations.
The security situation in the country remained a major source of concern especially in the Niger Delta region, with series of kidnapping and extreme violence both affecting the citizens of the country and foreigners who had wilfully come to the country to further commerce. Insecurity in the country increased to an unacceptable level. This development has led to the closure of many oil wells, and a decline in oil production levels and export earnings thus impacting negatively on the country's economy and image abroad.
In line with the present administration's promise to adhere strictly to the rule of law, the change in civilian administration witnessed unprecedented litigation from aggrieved parties challenging the election of persons into legislative, executive and Presidential positions and indeed the election process as a whole. The country's various electoral tribunals have, in different cases nullified and upheld the elections of disparaging individuals in the state, federal legislature and governorship. The Presidential election was upheld by the election tribunal on 26 February 2008; while the right of appeal of aggrieved parties has been set in motion.
Notwithstanding the hiccups which characterised the transition process and the obvious challenges posed by the corruption-ridden political and economic environment, the incumbent president has promised to focus on the revival of the nation's economy".
On the economy, the chairman said "The economy continued to witness impressive growth especially in the leading growth sectors of Banking, Telecoms and Services sectors despite the highly disputed April 2007 national elections. The GDP growth estimate for 2007 was 6.05 per cent with the Oil sector contribution dropping as a result of the Niger Delta crisis. The growth in the economy however exceeded annual global estimates of about 4.54 per cent.
The global economic crisis due to the sub-prime lendings by major banks and the imminent food shortages across the globe has triggered fears of a global recession. If this trend persists the ripple effect will in no time affect our local economy and indeed other African countries. Be that as it may the volume of Foreign Direct Investment into Africa in die last three (3) years exceeded $25billion.
Despite the growth in the economy essential social areas such as health, education and transportation have remained below average. Infrastructure such as roads, rails and power have also been largely neglected".
On the position of the insurance industry, the chairman said " The insurance industry in Nigeria is still an emerging industry. It is relatively small when compared to other developing economies and is characterised by low awareness and low market penetration. For example, South Africa, Africa's largest market has industry's gross premium at 15per cent of Gross Domestic Product [GDP] whilst the Nigerian insurance industry contributes only 0.5per cent of the country's GDP. The implication of this is that the industry has obvious potentials which are untapped and therefore a bright future. For instance the local content law in the area of Oil & Gas has thrown open a sector which hitherto was the exclusive preserve of foreign insurance companies. It is expected that the industry can retain as much as 70per cent of Oil & Gas business (if it has the capacity) by the year 2010".
Meanwhile, the company recorded a gross premium income of N2.715 billion in 2007 from N1.609 billion in 2006. Investment income increased by 236 per cent to N627 million from N266 million. Profit before taxation increased to N1.056 billion from N627.4 million , an increase of 68 per cent while profit after tax was N917 million as against N562 million thus recording an increase of 63 per cent over the previous year. Total assets recorded a growth of 41 per cent investment from N4.01 billion to N5.66 billion, while investment income grew from N1.43 billion to N1.96 billion with an investment income of N627 million from N266 million in 2006, an increase of 136 per cent.
About the future outlook of the company, Ojo said " Our mission of becoming one of the top 3 insurance companies in Nigeria by 2010 is well on track. We assure you that the "CUSTODIAN" brand is waxing stronger and we are resolute in preserving our culture of trust, innovation, prompt service delivery, professionalism and sound technical expertise. The proceeds of our recently concluded offers will be well utilised in further positioning die company financially and operationally.
We will pursue a global perspective in our business, forging solid relationships with international insurance and reinsurance companies. We will expand our branch network into the major geo-political zones of the country with visible presence in the northern and eastern parts of the country. We will enlarge our asset management capabilities through a combination of our internal resources and outsourcing. We will further invest in top class human capital and modern technology in reaching our goals. As a listed company, we will ensure that our share is a pride and delight for every investor in terms of high returns and capital appreciation".
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