Nairametrics|Staco Insurance Plc has witnessed heavy trades in its stock over the past one week. So far, over 100 million shares have traded since last week, with trades of over 20 million this week alone. The stock has been largely inactive in terms of trading, with usual trade volume size of a few thousand units. While industry sources believe that the sales are by an investor who is hard up for money, my hunch tells me that a new investor could be taking position.
Even as an existing investor, it will be fool hardy to increase one’s stake in a firm that has negative retained earnings and is unlikely to pay dividends any time soon. Capital appreciation isn’t a motive, as the share price has remained stagnant at 50 kobo. This seems to be the dominant share price of insurance companies on the Nigerian Stock Exchange.
The insurance sector is badly in need of reform. There are too many companies, with a poor capitalization. The National Insurance Commission (NAICOM) will conduct a capital verification exercise within the year.