Guinea Insurance hit a 5year low of N0.23 on Monday’s trading session on the Nigerian Stock Exchange. The stock shed N0.02 or 8%. Year to date, Guinea Insurance is down 54%.

Bua group

About the company 

Guinea Insurance Company Limited was established on December 3, 1958. The overseas shareholders held 51% majority shares before the indigenization decree of 1976 reversed the holding to 60% Nigerian interest, 40% overseas.

The overseas shareholders divested their 40% holding to existing Nigerian shareholders in 1988, thereby making the company 100% Nigerian. The company was listed on the Nigerian Stock Exchange on January 17, 1991.

Chrome Oil Services Limited owns 45% of the company’s issued share capital. Chrome is ultimately controlled by Emeka Offor.

Poor 9M 2018 results 

The decline in price this year may be closely correlated with the company’s poor results.

Results for the nine months ended September 30, 2018 show that gross premium written increased from N759 million in 2017 to N938 million in 2018.

The company made a loss before tax of N121 million in 2018, as against a profit before tax of N85 million made in the corresponding period of 2017. Loss after tax stood at N134 million in 2018, as against a profit after tax of N69 million made in 2017.

From all indications, the firm is very likely to record a loss for the 2018 financial year, as against a profit after tax of N251 million recorded in 2017.

Coronation Research

Likely reasons for the poor results

The loss recorded may be largely due to an increase in claims, as well as management expenses.

Claims expenses increased on both a quarterly and year to date basis. For the quarter ended September 2018, the firm had claim expenses of N58 million, as against a possible payment of N6 million from the reinsurance firm in the corresponding period of 2017.

On a year to date basis, claims also rose from N21.9 million in September 2017 to N102 million in September 2018.

While management expenses dipped on a quarterly basis from N181 million in 2017 to N162 million in 2018, year to date saw a significant increase from N482 million in 2017 to N605 million in 2018.

The increase was driven by  a rise in wages and salaries, as well as legal and professional fees.

No returns for shareholders

In addition to the absence of capital appreciation, shareholders will not be getting any dividend. Retained losses of  N867 million mean that the company has no funds to pay dividends.

 

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