16 insurance firms struggle, unable to hold AGM

With the year coming to an end, 16 insurance companies could not hold their 2015 Annual General Meeting (AGM), a development shareholders are unhappy with. ABDUL OLALEKAN writes.

As public and private companies across the country are closing their financial books for 2016, about 16 insurance companies, some of which were publicly quoted on the floor of The Nigerian Stock Exchange (NSE), were unable to conduct their 2015 Annual General Meeting (AGM), Business 247 News Online exclusively learnt.

Investigation shows that the affected companies had already closed their books for 2015, meaning that their 2015 AGM is not visible this year.

Moreover, the requirement stipulates that any company, especially, listed entity, must give a 21-day notice to its shareholders prior to an AGM date, and as it stands, none of the companies has done so.

While the likes of Linkage Assurance, African Alliance Insurance, UNIC Insurance, NICON Insurance and Guinea Insurance are still battling regulatory issues, as they were unable to do the needful to have their accounts approved by the insurance industry regulator, the National Insurance Commission(NAICOM) as at 7th of November, 2016, Great Nigeria Insurance (GNI Plc), Industrial and General Insurance (IGI) Plc, Goldlink Insurance, Alliance & General Insurance, Alliance & General Life, Investment & Allied Insurance Plc, Spring Life Assurance Plc, Nigeria Agricultural Insurance Corporation(NAIC) and Unitrust Insurance Company Ltd have not even submit their 2015 accounts to the regulatory authority, even as Equity Assurance and International Energy Insurance (IEI) Plc  had gotten their accounts approved, but were unable to brief their respective shareholders on the financial positions of the companies in 2015 financial year end.

Most of the affected underwriters, Business 247 News Online  learnt, are loss-making institutions and are having challenges balancing their books.

The last time GNI Plc briefed its shareholders on its financial status was in  2014 financial year, where it had to combine three AGMs together that year. However, some investors are already trying to acquire the company after years of loss-making streak, which could be a turn around in the fortune of the firm.

Equity Assurance, on the other hand, has equally gotten approval from NAICOM to go ahead with its 2015 AGM, but a Cote D’ Ivoire Insurance Company,  Sunu Assurances Vie Cote D’Ivoire,  earlier in the year, acquired a 60 per cent stake in the company, which market analysts said, might be responsible for its inability to hold AGM.

Guinea Insurance, has had its account approved, but have internal issues to settle before holding its 2015 AGM.

Therefore, the shareholders of the 17 insurers were left in the dark as to the state of their investments in those companies, although, most of the companies have financial challenges that is clipping their financial muscles to do certain things, such as AGM.

To this end, the affected insurers are already paying several millions of Naira to the NSE and NAICOM after the expiration of the 31st March deadline for listed entities to submit their previous year’s account to the Exchange and 30th June deadline for insurance firms to submit their account to NAICOM.

As it stands, African Alliance Insurance has paid a whooping N7.8 million as monetary fines for failure to submit as and when due, its 1st, 2nd and 3rd quarters, 2015 accounts to NSE, while it has equally paid NAICOM as well for violating submission deadline.

Great Nigeria Insurance, on the other hand, equally paid N7.5 million as fines for the same offence committed by Africa Alliance, even when the two companies have failed to declare meaningful dividend in the last five years.

Speaking on behalf of shareholders in an exclusive interview with Business 247 News Online  yesterday, the President, Progressive Shareholders Association of Nigeria(PSAN), Mr. Boniface Okezie, stated that the situation is worrisome, as they might have to conduct two AGMs (2015 and 2016) in 2017.

” Since NAICOM has given some of them approval, they should have done the AGM and put the ugly incident behind them. By 2017, that means they are going to have two AGMs at hand. How they are going to do it, is best known to them. That means some of them might come early January or February,” he observed.

Speaking on the five insurers whose accounts had been submitted, but yet to get regulatory approval, he urged the affected firms to do the right things, because, according to him, NAICOM must have seen something wrong with the accounts and refuse to approve them.

According to him, “The affected companies should be able to rectify issues that makes NAICOM fail to approve them and avoid repeating such issues.  Most of the companies paddled their accounts, and if your account is not good, NAICOM will not approve. Some have corporate governance issues. We commend NAICOM because it will not approve any account unless it is thorough, kudos to the commission for safe guarding the interest of the investors as well as customers.”

Insurance stocks, he said, are unhealthy for shareholders for some years now as they were unable to give good returns on investment, noting that this was the reason why their prices have remained at par value.

He said shareholders react to the results a company releases, its dividend payout, its future prospect, saying insurance companies have failed in all these.

“So, where do you expect the price to go? The price would remain as it is. It is the dividend payout that throws up the prices, and so long as you don’t pay a commensurate dividend to the shareholders, that is what you get,” he said.

He pointed out that shareholders would have sold insurance stocks and buy more promising stocks, but that selling such kobo stocks now would be to the detriment of the shareholders as they would be at a serious loss.

“Why some shareholders are still holding insurance stocks now is that if you sell now, you sell at a loss. That is why shareholders are still withholding them, otherwise, we would have sold them. Because if you are selling now, you will not recover your initial principle talk less of gain, so, we are holding it, hoping that one day, things would be better. It is not as if shareholders are cherishing the companies because you won’t want to incur double losses. If you are selling now, it is at par value and who will buy now?” he said.

Meanwhile, shareholders of listed insurance companies in the country may have to wait longer to get dividend, as insurers battle negative reserves.

Following the capital market crash that occurred in the country in 2008, most underwriters who had invested heavily in equities have their accounts in negative, while the share value of insurance stocks, alongside other listed equities witnessed a sharp price drop.

Business 247 News Online learnt that this allows most underwriters to incur heavy losses and were made to make huge provisions for doubtful investment, leading the firms to have negative reserves.

While most of the underwriters are making profits on a yearly basis, Business 247 News Online  investigation revealed that insurers devoted most of these profits to clear their negative reserve, and until they extinguish the debts, shareholders might have to wait longer to get a good returns on their investments.

Insurance shareholders have at various Annual General Meeting(AGMs) lambasted underwriters for their failure to give them dividend or bonus, especially as some companies have declared nothing to their shareholders in the last five years.

Speaking on this development, the Director, Finance and Account, NAICOM, Mr. Nicholas Opara, disclosed that, by regulation, the companies are not allowed to pay dividend until they clear their negative reserves.

“The commission will always ask them to extinguish the negative reserves before they pay dividend. Hopefully, most of them are making profit and if it continues, they should be able to declare dividend in the near future,” he pointed out.