Despite having faced several challenges recently, the insurance sector is set to experience positive times, according to analysts at Meristem Securities Limited.
In an investment guide released on Friday, the investment management and financial advisory services firm said the outlook for full-year 2013 results for insurance firms were positive.
It said, “Given the various reforms and initiatives introduced by the National Insurance Commission and investments by foreign players, which we believe, would have impacted strongly on growth, our outlook for 2013FY results for top insurance companies yet to release results is positive.
“On the back of good fundamentals and anticipated positive investors’ sentiments, top stocks to watch out for in the insurance sector are Custodian and Allied Insurance Plc, NEM Insurance Plc and Mansard Insurance Plc. However, Continental Reinsurance Plc also portends good fundamentals but investors’ appetite has been weak in recent times.”
Despite having a positive outlook, the report admitted that the insurance sector had faced tough times.
It said, “The insurance sector has been characterised by negative investor sentiments, largely owing to ‘less-than-adequate’ transparency in financial reporting and disclosure, poor dividends relative market prices and weak performance among others. Only Custodian and Allied Insurance and Mansard Insurance have released 2013 full-year results thus far.
On the performance of the market in recent times, analysts at Meristem Securities explained that company results have played a huge part.
They wrote in the report, “The stock market has maintained a positive mood in the last few weeks. This is largely attributed to relative attractive pricing, reasonably impressive 2013FY results across broad spectrum, and modest first quarter 2014 performances of a few banks that have released results so far.”