Staco Insurance Plc Profit After Tax fell from N240 million in Q1 2017 to N202 million in H1 2017, despite an increase in gross premium written. Gross Premium written increased from N3.03 billion in 2016 to N3.48 billion in 2017. Despite the profit, shareholders may not be getting dividends anytime soon as the company has negative retained earnings of N4.9 billion.
Possible reasons for the drop in performance
The Nigerian economy slipped into recession late last year, which led to a drop in economic activities. The drop in oil prices led to a foreign exchange crisis, which led the Central Bank of Nigeria (CBN) to embark on a tight foreign exchange policy. This affected several companies, especially involved those in importation of goods and services that were banned by the apex bank.
STACO insurance was incorporated on October 10, 1991 as a public limited liability company and began operations in October 1994. The company was listed on the Nigerian Stock Exchange (NSE) on the 25th of June 2007. The company’s shares closed yesterday at 50 kobo with no form of price appreciation year to date, underperforming the NSE All Share Index which is up 38% year to date. STACO insurance recently raised N1.6 billion through a private placement that saw new majority investors taking over.
The National Insurance Commission (NAICOM) recently instituted a risk based capitalization programme. Insurance companies will now insure risk in proportion to their capital base, thus leading to several firms embarking on capital raising programmes.
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