Insurance Index Emerge Worst Performing on NGX in 2022

Kayode Tokede

The insurance index closed last Friday at -15.09 per cent in Year-till-Date (YtD) performance to emerge as one of the worst indices on the trading floor of the Nigerian Exchange Limited (NGX) in 2022, followed by NGX Consumer Goods Index.

The market so far in 2022 has appreciated by 16.36 per cent, driven by retail and high-network investors’ participation in fundamental stocks on the bourse.

The NGX Consumer Goods Index down by -4.69 per cent YtD performance, following investors’ profit-taking in notable stocks such as Nestle Nigeria Plc, Dangote Sugar Plc, Nigerian Breweries Plc, Flour Mills Nigeria Plc, and Unilever Nigeria Plc.

Nestle Nigeria opened 2022 at N1,556.50per share dropped to N980 per share as of last week, while Dangote Sugar depreciated by 17.4per cent to close December 23, 2022 at N15.5 from N17.4per share it opened for trading.

Unilever also depreciated by 18.6 per cent YtD to close at N11.80 per share from N14.50per share it closed in 2021.

Capital market analysts have expressed that the suspension of the insurance sector recapitalisation exercise by the National Insurance Commission (NAICOM) impacted on the Index performance, stating that the exit of foreign investors eroded the NGX Consumer Goods Index. 

The mainboard of the NGX has 21 insurance companies with profit-taking by investors in companies such as:  AXA Mansard Insurance Plc, Consolidated Hallmark Insurance Plc Coronation Insurance Plc, Lasaco Assurance Plc, Mutual Benefits Assurance Plc, NEM Insurance Plc, Mutual Benefits Assurance Plc, Prestige Assurance Plc, Regency Assurance Plc, Sovereign Trust Insurance Plc, Sunu Assurances Nigeria Plc eroded the insurance index.

As of December 23, 2022, the insurance index major drivers, AXA Mansard Insurance stock price  dropped to N1.96 per share from N2.32 per share it opened in 2022, while Consolidated Hallmark Insurance has depreciated by -24.05 per cent YtD to N0.6 per share from N0.79 per share it closed for trading in 2021.

Investors in Regency Assurance suffered the highest lost as the company’s stock price dropped by 51 per cent YtD  to N0.25 per share from N0.51 per share it closed in 2021.

Other major losers include Sunu Assurances Nigeria that dropped by 36 per cent YtD to N0.29per share; LASACO Assurance down by 19 per cent YtD  to N0.85 per share; Mutual Benefits Assurance depreciated by 18.2 per cent to N0.27; Coronation Insurance down by 27 per cent YtD to N0.41 from N0.56; Linkage Assurance dropped by 22 per cent YtD to N0.4 and AIICO Insurance depreciated by AIICO Insurance tumbled by  21.4 per cent YtD to N0.55 per share.

Cornerstone Insurance Plc is the only stock that appreciated by 28.2 per cent to N0.59 per share, while other insurance stocks such as:  International Energy Insurance Plc, Staco Insurance Plc, Standard Alliance Insurance Plc., Universal Insurance Plc, NEM Insurance Plc, Niger Insurance Plc, Goldlink Insurance Plc, Guinea Insurance Plc, and African Alliance Insurance Plc traded flat.

Analysts attributed the insurance sector’s performance to poor disclosure of audited result and accounts and lack of policy reforms needed to drive investors’ participation.

Take for instance, International Energy Insurance, Niger Insurance, African Alliance Insurance, Goldlink Insurance, Standard Alliance Insurance and STACO Insurance have not submitted 2020 and 2021 result and accounts to investing public.

Speaking on the investors ‘profit-taking in insurance companies, the vice president Highcap securities limited, Mr. David Adnori stated that the listed insurance stocks are not attractive to investors.

According to him: “Some investors reacted to the unimpressive financial performances of some listed companies, while some engaged in profit-taking activities.

“Also, some investors reacted negatively to insurance companies that have not released their 2021 audited financial report.”

On his part, the Chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion noted that the insurance sector performance on the NGX is purely market dynamics.

According to him, “since recapitalization activities in the sector was announced, we witnessed improved buying interest as a result of anticipated mergers and acquisition in the industry that created wealth for smart and discerning traders.

“When the suspension was announced, investors reacted and the Insurance Index continued to nosedive. The sector needed policy reforms and investors’ confidence from listed companies before their stocks can appreciate.”