AXA Mansard is one of the few insurance firms, optimally positioned to meet the new capitalization and solvency requirements by the National Insurance Commission (NAICOM). The company is our stock pick for the week.
About the company
AXA Mansard was incorporated on 23 June, 1989 as a private limited liability company called “Heritage Assurance Limited” and was issued a composite insurance license by the National Insurance Commission (NAICOM) in March 2004.
The company’s name was changed to Guaranty Trust Assurance Limited in September 2004, following the acquisition of a majority shareholding by Guaranty Trust Bank Plc, and changed again to Guaranty Trust Assurance Plc in March 2006.
In November 2009, the company was listed on the Nigerian Stock Exchange. Guaranty Trust Bank divested from the firm in 2012, following CBN guidelines for banks to either divest from non-banking subsidiaries or form holding companies. Mansard was then bought by Assur Africa Holdings.
In December 2014, AXA acquired Assur Africa Holdings. The Company modified its name and corporate identity to AXA Mansard Insurance Plc in July 2015.
Results for the period ended June 2018 show that gross premium written increased from N17.9 billion in 2017 to N23.5 billion in 2018. Profit before tax, however, dropped from N2.3 billion in 2017 to N1.8 billion in 2018. Profit after tax also dropped from N2.1 billion in 2017 to N1.5 billion in 2018.
Current Share Price: N2.55
Year High: N2.94
Year Low: N2.02
Year to Date Return: 32.12%
One Year Return: 37.64%
Chances of the stock going up in the medium to long-term are quite low. The stock has outperformed the All Share Index which is down 7.13% year to date. Market sentiments in the last few weeks have been largely negative, save for last week.
Mansard is trading at a PE ratio of 13.31 times earnings, much higher than the average PE ratio on the Nigerian Stock Exchange (NSE) and its peers such as AIICO which is trading at 2.49 times earnings and even Custodian Investments Plc, the most expensive stock in the sector, which is trading at 4.4 times earnings.
The stock has traditionally traded at a premium, due to its foreign ownership.
The insurance space will witness a flurry of activities in the months to come, due to the new tier-based capitalization system announced by the National Insurance Commission (NAICOM).
By virtue of its shareholders’ funds, Mansard would operate in the tier one space for composite insurance companies which require firms to have shareholders’ funds of at least N15 billion.
Results for the half year ended June 2018 show that Mansard (the company) has shareholders’ funds of N17.1 billion. The company may have to raise further funds however in order to meet tier one solvency requirements. In view of its foreign ownership, this would not be an issue. NAICOM has stated that it would communicate with each firm on the shortfalls and we expect some clarity from management on this.
On a company-specific basis, FY 2018 results could come in lower than the prior year, due to a drop in investment income, occassioned by lower net gains on property revaluation.
Troubling signs on crypto market, SEC tags many crypto assets as Securities
These further suggest the head of the financial watchdog could tighten its grip on the crypto market.
Dark clouds hover above the cryptoverse as the leader of the world’s most powerful investments regulatory agency affirmed most crypto assets as securities.
Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC) in his most recent appearance on CNBC’s Squawk Box, opined that “many” crypto-assets were securities, meaning many of these assets required regulatory oversights and exchanges trading such crypto assets require at least a form of SEC regulation.
"At the core I think investor protection has helped economic growth," says SEC Chair Gary Gensler. "Transparency and competition in markets that's good for investors, that's good for issuers." pic.twitter.com/FoD8MH7JND
— Squawk Box (@SquawkCNBC) May 7, 2021
In his words:
“The extent that something is a security, the SEC has a lot of authority. And a lot of crypto tokens—I won’t call them cryptocurrencies for this moment—are indeed securities.”
What you must know
An asset is considered a financial security asset if it is a tradable financial asset and thus has monetary value.
What Gensler said suggests that the financial assets watchdog could tighten its grip on the crypto market. Recall that SEC is already battling with Ripple and calling XRP a security asset.
However, Gary Gensler described the flagship crypto asset as a store of value but with a very volatile characteristic and not a security.
It’s important to understand why the regulator doesn’t classify Bitcoin as a security. It is based on the fact that its existence began through mining as an incentive in validating a distributed platform. There are no pre-mined coins, no initial token offering, and no kind of business entity governing it.
A few months ago, Nigeria’s Securities and Exchange Commission released guidelines referring to cryptoassets as securities, except proven otherwise.
- The position of the Commission is that virtual crypto assets are securities, unless proven otherwise.
- Thus, the burden of proving that the crypto assets proposed to be offered are not securities and therefore not under the jurisdiction of the SEC, is placed on the issuer or sponsor of the said assets.
- Issuers or sponsors are expected to satisfy the burden of proving that the virtual assets do not constitute securities by making an initial assessment filing.
- However, where the finding of the Commission is that the virtual assets are indeed securities (not structured to be exclusively offered through crowdfunding portals or other exempt methods), then the issuer or sponsor must register the digital assets.
That being said, recent price actions reveal the bullish trend in the crypto market is still very much in play despite regulatory fears surrounding the crypto market as its market value now stands at $2.42 trillion, posting a 2.47% increase over the last day.
Bullish dominance in the NGX Banking Index
The NGX Banking Index made a bullish recovery at the end of yesterday’s trading session with an increase of +1.11%, pushing the index points to 354.25.
The NGX Banking Index made a bullish recovery at the end of yesterday’s trading session with an increase of +1.11%, pushing the index points to 354.25. There were 5 profits opposing 5 losses, but the magnitude of the gainers pushed the Banking Index into the green.
Union Bank led the gainers with a profit of +0.45, pushing its price upwards from N4.95 to N5.40.
Zenith Bank came second amongst the gainers with a profit of +1.14%, posting N22.20 from the previous day’s close of N21.95.
Guaranty Trust Bank also closed in profits with an increase of +0.86%, leaving its price at N29.40 from its previous price of N29.00. Sterling Bank was also part of the gainers with a profit of +0.63% putting its price at N1.60 from its previous close of N1.58.
Access Bank made profits of 0.62%, pushing its prices to N8.15 from N8.10.
Wema Bank was the biggest loser at the end of yesterday’s trading session as it made losses of -4.92%, leaving its price at N0.58 from N0.61.
Jaiz Bank also made losses of -3.23%, pushing its closing price to N0.63 from N0.62 obtained the previous day.
Ecobank joined the losers, posting a loss of -1.89% which put its price at N5.20 from its previous price of N5.30.
Fidelity Bank followed with a loss of -0.90%, putting its price at N2.24 from N2.22. UBA also posted a loss of -0.69%, pushing its price from N7.25 to N7.20.
- Market sentiment tends bullish as the magnitude of gainers outweighed the losers despite the 5 gainers and 5 losers held at the end of the trading session.
- Nairametrics advises cautious buying amid growing uncertainties.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- Okomu Oil proposes dividend worth N6.7 billion for shareholders.
- Ardova Plc confirms appointment of Oladeinde Nelson-Cole as secretary.
- Cadbury Nigeria Plc set to hold 56th Annual General Meeting (AGM) on June 16.
- FCMB Group Plc appoints Muibat Ijaiya as Director.
- Afromedia Plc reports a loss after tax of N27.3 million in Q1 2021.