Analysts Advocate Delisting Of Quoted Insurers | Independent Newspapers Limited
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Analysts Advocate Delisting Of Quoted Insurers

Posted: Jul 16, 2015 at 12:03 am   /   by   /   comments (0)

Equity analysts at Proshare Nigeria have advocated the some insurance companies quoted on the floor of the Nigerian Stock Exchange (NSE) should be delisted since their share price remained abysmally low while such insurers have failed to give expected returns to shareholders on their investment.

In view of the fact that the recent results of insurance firms quoted on the floor of the exchange show some of these insurers are on the verge of collapse, analysts say this has translated into their abysmally low or stagnant share price.

It is generally accepted financial practice that investors are attracted to a company because there is the possibility the share price will spike, hence a higher return on investment or capital gains is expected.

Of the 14 insurers considered, eight have share price of N0.50, while three have share price above N0.50 but less than N1, but none have share price exceeding N5.

The share price of companies like Equity Assurance, Staco Insurance, and Consolidated Hallmark Insurance have remained stagnant since 2011 while the share price of Sovereign Trust and Cornerstone last rose in 2013.

The N102.15 billion cumulative market capitalisation of the 14 insurers is less than the N265.14 billion market cap of Tier 2 lender, Stanbic IBTC.

Analysts maintained that the recurring losses of some insurance firms as evidenced by their negative retained earnings threatens dividend paying abilities, is denting their share price and threatens going concern.

Companies like Wapic, Equity, Sovereign Trust, UnityKapital, Staco and Wapic have incurred more losses than profits since they commenced operations.

It was further stressed by the analysts that this not a good sign and also an indication that these firms are bankrupt, since it implies long term series of losses.