Two weeks into the new year and the Nigerian Stock Market is already up 2.5% year to date. Stocks got to a fly last week following a slew of corporate deals that got the market excited.
During the week, Ardova, Transcorp, Champions Breweries, etc. were all in the news for reported acquisitions that are already paving the way for what could be a very busy 2020 for the stock market.
As corporate deals dominated the headlines, penny stocks topped the gainers’ charts with stocks like Japaul, Mutual Benefit, Royal Exchange, etc. posting double-digit gains. In fact, the top ten gainers last week all returned over 30%.
Among the top ten stocks, last week include about 7 Insurance stocks which all gained 30% and above. None of these companies have published any corporate actions lately and neither have they published any results. Yet their share prices have gained significantly in just 10 days of trading.
Insurance Stocks on the fly
The insurance sector is currently the best performing in the country with the NSE Insurance Index already posting a YTD return of 28.63% in just two weeks.
- Out of the 23 stocks listed in the index, 14 have posted at least 9% gains and above while the top ten are up by over 25%.
- Apart from being the best performing index on the exchange, it is arguably the best asset class to invest in Nigeria now.
- At 28,63%, the index is already beating the inflation rate which topped 15% in December.
- Last year, Sunu Assurance, another insurance stock was the best performing stock in the country posting a return of 400% YTD. AIICO ended with a 57% pop and Lasaco 40%.
Fundamentals not the driver
- While most insurance stocks appeared undervalued for much of the last two years, the harsh business environment faced by most insurance last year firms could not have pushed valuations this high.
- For example, insurance claims for the nation’s top insurers, Custodian, NEM, Axa Mansard, AIICO, WAPIC, and Consolidated Insurance rose from N56.3 billion in the first 9 months of 2019 compared to over N78 billion in the first 9 months of 2020.
- Insurance claims as a percentage of Net Premium in the same period hit 72% in 2020 compared to 61% in the same period in 2019.
- Insurance companies make money from a combination of underwriting profits (net premiums net of claims) and investment income.
Recapitalization is seen driving insurance stocks
Nairametrics understands the driver is likely the recent recapitalization efforts that have dominated the sector since 2019. Insurance regulator NAICOM had given Insurance firms until December 2020 to recapitalize or risk their licenses being revoked.
- The recapitalization rules require life insurance firms to meet a minimum paid-up capital of N8 billion, up from N2 billion previously.
- In the same vein, general insurance companies are required to raise their minimum paid-up capital to N10.0 billion from N3 billion previously.
- The regulatory capital for composite insurance was raised to N18 billion from N5 billion previously while reinsurance businesses are now required to have a minimum capital of N20 billion from a previous N10 billion.
However, the ravaging covid-19 pandemic forced the regulator to move the deadline to September 20202 but insurance firms were required to meet half the recapitalization requirement by the end of December 2020.
Court order Suspends Recapitalization
As insurance firms battled to raise capital, some took the regulator to court and obtained a court order suspending the recapitalization requirement.
- According to reports, Justice C. J. Aneke of the Federal High Court issued an order suspending the recapitalization on the back of an ex parte application applied for by the Incorporated Trustees of the Pragmatic Shareholders’ Association of Nigeria.
- In late 2020 the House of Representatives also passed a resolution demanding a suspension of the recapitalization efforts.
- Nairametrics understands despite all these suspensions and postponements, Insurance firms have till June to at least meet 50% of the recapitalization goals.
Upshots: As we continue to watch this space, Nairametrics expects a flurry of public offers, acquisitions, divestments to dominate the insurance sector in 2021. As charter around potential deals dominates the rumour mills of the market, insurance stocks will increase in demand. As usual, investors are advised to pick choose wisely.
COVID-19 Update in Nigeria
On the 7th of March 2021, 269 new confirmed cases and 5 deaths were recorded in Nigeria
The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record significant increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 158,506 confirmed cases.
On the 7th of March 2021, 269 new confirmed cases and 5 deaths were recorded in Nigeria.
To date, 158,506 cases have been confirmed, 137,875 cases have been discharged and 1,969 deaths have been recorded in 36 states and the Federal Capital Territory.
A total of 1.54 million tests have been carried out as of March 7th, 2021 compared to 1.49 million tests a day earlier.
COVID-19 Case Updates- 7th March 2021,
- Total Number of Cases – 158,506
- Total Number Discharged – 137,890
- Total Deaths – 1,969
- Total Tests Carried out – 1,544,008
According to the NCDC, the 269 new cases are reported from 19 states- Enugu (78), Bauchi (37), Rivers (22), Imo (18), Ogun (16), FCT (15), Akwa Ibom (13), Kaduna (13), Kebbi (11), Kwara (9), Edo(7), Ekiti (6), Borno (5), Yobe(5), Kano (4) Nasarawa (3), Osun (3), Anambra (2) and Plateau (2).
Meanwhile, the latest numbers bring Lagos state total confirmed cases to 56,444, followed by Abuja (19,350), Plateau (8,944), Kaduna (8,658), Oyo (6,766), Rivers (6,680), Edo (4,670), Ogun (4,437), Kano (3,844), Ondo (3,066), Kwara (2,962), Delta (2,582), Osun (2,457), Nasarawa (2,251), Enugu (2,156), Katsina (2,060), Gombe (2,010), Ebonyi (1,951), Anambra (1,813), Akwa Ibom (1,610), and Abia (1,588).
Imo State has recorded 1,569 cases, Borno (1,308), Bauchi (1,274), Benue (1,188), Adamawa (942), Niger (919), Taraba (863), Ekiti (834), Bayelsa (779), Sokoto (769), Jigawa (496), Kebbi (412), Cross River (334), Yobe (293), Zamfara (222), while Kogi state has recorded 5 cases only.
Lock Down and Curfew
In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.
The movement restriction, which was extended by another two weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.
On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.
On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.
Governor Babajide Sanwo-Olu of Lagos State announced the closed down of the Eti-Osa Isolation Centre, with effect from Friday, 31st July 2020. He also mentioned that the Agidingbi Isolation Centre would also be closed and the patients relocated to a large capacity centre.
Due to the increased number of covid-19 cases in Nigeria, the Nigerian government ordered the reopening of Isolation and treatment centres in the country on Thursday, 10th December 2020.
On 26th January 2021, the Federal Government announced the extension of the guidelines of phase 3 of the eased lockdown by one month following the rising cases of the coronavirus disease in the country and the expiration of phase 3 of the eased lockdown.
On 28th February 2021, the federal government confirmed that the first tranche of Covid-19 vaccines will arrive in Nigeria on Tuesday, March 2nd, 2021.
On Tuesday, 2nd March 2021, the National Primary health Care Development Agency announced the arrival of the expected COVX Astrazeneca/Oxford covid-19 vaccines.
On Saturday, 6th March 2021, President Muhammadu Buhari and his vice, Yemi Osinbajo received vaccination against the covid-19 as the State House in Abuja.
Supreme Court Judge, Sylvester Ngwuta reported dead
Justice Sylvester Ngwuta, has been reported dead.
A Supreme Court Judge, Justice Sylvester Ngwuta, has been reported dead.
He was said to have died in the early morning of Sunday, March 7, 2021, in his sleep at his official residence in Abuja at almost 70 years.
According to a report from the News Agency of Nigeria (NAN), Justice Ngwuta who is from Amofia-Ukawu, Onicha Local Government Area of Ebonyi State, was said to be getting set for his retirement from the Supreme Court on March 30, 2021, upon attainment of the mandatory retirement age.
What you should know
- It can be recalled that Justice Ngwuta was arraigned before the Federal High Court in Abuja in 2017 over money laundering and passport charges after large sums of money were discovered in his residence following a raid by security officials
- He started his private legal practice at Abakaliki in July 1978 to October 1995, from where he was appointed a judge of the High Court Abia in October 1995 and then promoted to the Court of Appeal on May 22, 2003, was finally sworn-in as Justice of the Supreme Court of Nigeria in May 2011.
- He was the chairman of a judicial panel of inquiry into the Obegu Enyibichirikwo Disturbance 1997-1998 and has been a member of several Election Petition Tribunal, Governship and legislative House Election Petition Tribunal; Nasarawa State held at Lafia in February 1999, National Assembly Election Petition Tribunal Plateau State held at Jos in April 1999, among others.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- Seplat falls into a loss in FY 2020
- 2020 FY Results: Cornerstone Insurance Plc reports a 61.1% decline in profit
- Ellah Lakes increases operating expenses by 33.36% in HY 2020
- 2020 FY Results: Nigerian Breweries reports a 54.3% decline in profits in 2020
- Abbey Mortgage Bank projects N51.08 million profit in Q2 2020.