The Insurance sector of the Nigerian stock exchange is not one to be entirely bullish about if you are a lover of fundamentals. Fundamental Investing refers to the use of a company’s past performance (profits and revenues) to project its performance for the future and thus value the stock today.
There are over a dozen insurance companies in Nigeria quoted on the stock exchange and quite frankly most of them are what we term zombie stocks. In this article, we will highlight why we think they are zombie stocks.
Unic Insurance happens to be a serial offender when it comes to submission of results as it is yet to submit its 2015 and 2016 results. Though the firm was recently acquired by Liberty holdings a South African company. Its 2014 results which are the most recent on the NSE website show a loss after tax of N687 million. The company has failed to pay dividends since 2013.
Equity assurance is currently trading at 50 kobo which is the minimum price a stock can trade on the Nigerian Stock Exchange (NSE). The company is also yet to release its 2016 audited financial statements SIX MONTHS after it ended. The company had negative retained earnings of N5.6 billion as at December 2015, so paying dividends is out of the question.
Guinea Insurance is also at the 50-kobo club on the NSE. In addition, the company has failed to submit its 2016 audited year results. The company had negative retained earnings of N900 million as at Q3 2016, and has not paid dividends in over two years.
While Cornerstone Insurance has released its 2016 results and made a profit, the stock remains at the 50 kobo mark for over a year, thus returning no capital appreciation to shareholders. The company has negative earnings of N797 million, so dividend payment is far off. The company hasn’t paid dividend for at least 3 years.
Mutual Benefits insurance has been stuck at the 50-kobo bus stop for at least 3 years. The company made a loss of N1.2 billion in 2016. The company had accumulated losses of N1.2 billion as at December 2016, and has not paid dividends in over 3 years.
Staco insurance has made sustained losses in the past 3 years and has remained at the 50-kobo floor. The company made a loss after tax of N1.2 billion in its financial year ended 2016. Negative retained earnings of N4.9 billion as at FY 2016 means hopes of the company paying dividends are very dim.
Goldlink Insurance is yet to release its audited financial statements for 2016 and is also stuck at the 50-kobo floor. The most current results available on the NSE website are for Q3 2015 and the company had negative retained earnings of N11.9 billion. The company has also not paid dividends for several years.
International Energy Insurance
IEI has had a turbulent few years and is currently being run by an interim management board. The company, like most insurance firms on the exchange has been stuck at the 50-kobo mark. It has also failed in paying dividends for several years. The company made a loss after tax of N945 million in 2016.
Sovereign Trust Insurance
Sovereign Trust Insurance has remained stuck at the 50-kobo floor like many insurance firms listed on the NSE. The company has also failed to pay dividends and was one of the 17 companies that was suspended from trading for late submission of results. The company has also failed to pay dividends in several years.
Universal Insurance was one of the 15 firms suspended by the NSE for non-submission of its 2016 audited results. The company’s shares have also remained at the 50-kobo mark. The company has made negative retained earnings and losses since 2014, thus paying no dividends.