20 February 2013

Nigeria: Insurance Stocks Record Mixed Performance

Despite the remarkable year-to-date appreciation recorded by most equities on the Nigerian Stock Exchange (NSE), the performance of the insurance sub-sector has been mixed.

The performance of insurance stocks monitored by THISDAY on Monday showed that while some equities quoted on the subsector largely known for its sluggish and uninspiring performance had recorded significant year-to-date appreciation since January, others have remained at their nominal value.

For instance, while shares of Mansard Insurance Plc, which started the year at N1.93 per share on January 2, has appreciated by 30 per cent to N2.47 per share as at Monday, Prestige Insurance Plc's shares also climbed significantly by 83 per cent from 52 kobo per share as at closing bell of the first trading session, to 95 kobo per share on Monday. In the same vein, while Aiico Insurance shares have also recorded 72 per cent capital appreciation this year, from 62 kobo as at January 2, to N1.07 per share on Monday, shares of Continental Reinsurance Plc also jumped by 30 per cent to close at N1.03 per share on Monday, as against the 79 kobo per share it stood at the beginning of the year.

Custodian and Allied Insurance shares also advanced by 65 per cent to N2.30 per share, while WAPIC's shares appreciated by significantly by 155 per cent to N1.48 per share on Monday, from 58 kobo per share at the beginning of the year.

On the other hand, shares of Consolidated Hallmark Insurance Plc, Equity Assurance Plc, Lasaco Plc, Great Nigeria Insurance Plc, Linkage Assurance Plc, amongst others have been typically topsy-turvy, as they refused to move with the market trend.

Analysts argued that because of their low prices, insurance stocks would continue to attract investors.

According to a report by BGL Securities Limited, the huge potential of the insurance business had remained untapped in Nigeria.

"Insurance also serves as the custodian of the nation's wealth through the process of indemnification. But Nigeria is still struggling to take a significant share of the African insurance market," BGL said in the report.

Also, Group Managing Director, Meristem Securities Limited, Mr. Oluwole Abegunde, had at a recent forum, predicted that that in the next few months, lots of investors would be attracted to the insurance sub-sector.

"Analysis have shown that the insurance sub-sector is one that investors should watch out closely for. There is going to be a significant shift in the insurance companies, and we are set to start seeing a significant re-entry into that sector," he said.

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