International Energy Insurance is walking on a tight rope looking at its recently released 2015 audited results. It’s board and management will have to take drastic action considering that the Nigerian insurer’s future operation is under immense threat given the impact of a pile of accumulated losses on its balance sheet.
A cursory examination of the company’s 2015 audited financial statement shows the insurer recorded a negative reserve of N13.44 billion compared to N12.61 billion the previous year. The N13.44 billion recurring losses figure are more than total assets of N8.07 billion as December 2015.
Consequently, this resulted in a negative total equity of N2.12 billion in the period under review.
This means the company has recorded more losses than profit throughput its existence. It actually posted a loss after tax of N700.01 million in December 2015, lower than the N2.16 billion in December 2014.
Little wonder such faltering performance enraged investors who questioned the strategies of its management and boards of directors in delivering stellar performance that would magnify shareholders value.
In 2015, the National Insurance Commission (NAICOM), had dissolved the Board of the International Energy Insurance (IEI) following allegations against some directors of the company.
PearlChrix Property’s Limited, the second largest shareholder of the company raised these serious concerns regarding the financial health and status of the company.
This is in connection with International Energy Insurance depleting shareholder’s fund and its ability to remain a going concern after a worsened working capital position has become an increasing threat.
Accounting to the company’s auditors: “The total amount required to settle insurance contract liabilities, trade and other payables, current income tax liabilities and foreign loan liabilities amounted to N9.70 billion while the total amount available to meet the company’s obligation is only N3.70 billion on the basis that they are all realizable within the year leaving a deficit of N6 billion”
“The company also has a deficit of N5.40 billion in its solvency margin and a N5.40 billion in capital adequacy. In effect the company is having serious working capital problems maybe threatened” said auditors of International Energy Insurance.
This company has very little time to turn thing around as it is on the edges of going solvent. If they fail to take drastic action, then NAICOM might do it for them.
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Our regulatory bodies have reduced themselves to funeral directors rather than act as doctors to prevent avoidable deaths. What will NAICOM salvage now after innocent investors have been robbed of their savings either by reckless managers or outright fraudsters? Yesterday this publication highlighted a loss making specialist namely Japaul Maritime Plc. There are several in that category and the ordinary man now believes it goes beyond normal business losses. Think of it that these companies were doing well as private companies. Check out Chams Plc and the like.
SEC and other agencies must find a way to hold directors and managers of companies to the presents they make in their prospectus. An equivalent of EFCC should be set up for the private sector not to stamp results as presented but to delve into the affairs of corporates. The private sector is said to be the engine of the economy and should be properly policed. A good reason why we are not growing as we ought to is that many organisations are under-performing.
May I thank NAIRAMETRICS for these highlights.
Dear Nairametric, i really want to thank you for your effort in sensitizing the public on the positions of the companies. They have killed many Nigerians but i expect the regulatory authorities to step in immediately