Daily Independent (Lagos)
Kingsley Ighomwenghian
15 October 2008
Just as it promised some weeks ago, the management of underwriting giant- Law Union & Rock Insurance Plc, seems set to excite shareholders with more than the six kobo dividend it paid at the end of last financial year, going by the third quarter result submitted to the Nigerian Stock Exchange on Monday.
The result for the third quarter ended September 30, 2008 indicated that profit before and after tax growth significantly outpaced that gross premium income for the period, in what some say is an indication of improved management capacity.
The company generated premium income of about N3.004 billion, representing a rise of about N999 million or 49.82 per cent over the previous nine months' N2.005 billion. Of this amount, the management grew profit before tax to N642.29 million representing an increase of about N327.96 million or 98.03 per cent over previous third quarter's N324.33 million, while profit attributable to shareholders for the period rose by about N253.54 million or 97.71 per cent to N513 million, from N259.46 million in the corresponding period of last year.
A breakdown of the net profit figure shows that earnings per shares stood at 17 kobo, up from 8.64 kobo in the first nine months of last financial year, just as the result translates to the fact that the Olumide Falohun-led management successfully converted 17.07 kobo of every Naira earned as premium to profit, from previous 12.94 kobo per Naira.
Directors of the company are believed to have agreed on the need for shareholders to share from the fruits of the year's impressive performance in appreciation of their loyalty over the years when the company was being restructured and repositioned by the management team.
The company is expected to report impressive performance in all its financial indicators for the period under review by year end, according to a source close to Law Union & Rock.
Analysts believe that the improvement in the health indicators of Law Union & Rock, one of Nigeria's oldest insurance firms, is consistent with its performance record in the last four years. They link the growing improvement in the performance of the company in recent years to the process upgrade and overall re-engineering programme instituted in the company in 2004. The company has posted impressive numbers following the implementation of the turnaround project.
In recent years also, Law Union kept to its policy of prompt payment of valid claims to policyholders. Within the period ended December 31, 2007, for instance, the company's claims settlement rose by 17 per cent to N438.9 million from N373 million paid in the 2006 financial year, suggesting that it has an effective risk management capacity.
With an annual growth rate of 65 per cent in total asset base in the last four years, Law Union & Rock Insurance has stepped up significantly in premium income, profit taking and profitability, market share and overall visibility in the marketplace. For instance, the company's gross premium income is said to have grown by about 245 per cent between 2004 and the 2007 financial year.
The company, some months ago, announced the commencement the third phase of its information and communication technology (ICT) infrastructure upgrade to help drive its operations for better and more efficient service delivery.
By the end of this phase, which continues a trend of steady ICT improvements since 2004, the company said in a statement, ensures that all its regional offices are linked to the head office enterprise insurance application.
This is expected to drive the company's operations better, thereby enhancing quality and prompt service delivery in all aspects of IT operations.
Falohun explained that the IT upgrade would help accelerate the turnaround time for doing business, add to customer value boost employee efficiency and boost production and profitability for the company in the years ahead.
The robust result has been linked to the outcome of a report of the management review of performance from its regional markets in the Southwest as well as the North and Abuja indicating that Law Union surpassed set targets for the second quarter in the public sector, bankassurance and retail market business.
The performance review is the company's strategic tool for monitoring performance and guiding daily management operations.
The company, the statement added, is currently enjoying strong confidence on the stock market, where its share commands fair valuation, just as experts have predicted continuing rise in the value of the company's share on the stock market. The bullish outlook of the company on the stock market is driven by series of innovations and improvement that have characterised the management of the company in the last four years.
Law Union is one of the highly capitalised insurance companies in the country with a shareholders' value of about N5 billion. The company is now stronger and better placed to play in the big league in the Nigerian insurance market.
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