Hope rises as six insurance firms break 100 yearly appreciation

In a year marked with economic uncertainties, Nigeria’s insurance sector has emerged as a surprising frontrunner of the Nigerian Exchange Limited (NGX) gain as six players recorded over 100 per cent year-to-date (YTD) gain.

The stocks are Sunu Assurance, Veritas Capital, Guinea Insurance, Wapic Insurance, Cornerstone Insurance and Sovereign Trust Insurance with a combined market capitalisation of N150.5 billion. They have outperformed the broader market all-share index (ASI) and the NGX insurance index.

While the overall ASI and insurance index recorded 35.2 per cent and 92.5 per cent as at the close of transactions on December 20, Sunu Assurance, which reopened for transactions in January 2024 at a share price of N1.10 closed at N7.96 to pick a 589 per cent gain.

It ranked as the second top performing on the NGX in terms of year-to-date performance. The company closed transactions last week Friday with a market capitalisation of N43.5 billion.

Similarly, Veritas Kapital Assurance with a market capitalization of N18.7 billion, began the year with a share price of 37 kobo but at the close of transactions on Friday, the share price hit N1.39 kobo, adding 265 per cent YTD ranking eighth on the NGX in terms performance.

For Guinea Insurance with a capitalisation of N5.48 billion, its share price rose by 138 per cent from 29 kobo to 69 kobo. Its share price soared by 25 per cent within four weeks.

Cornerstone Insurance’s share price appreciated from N1.40 kobo to N3.15 kobo, adding 125 per cent with a capitalisation put at N57.2 billion while Sovereign Trust with a capitalisation of N12.8 billion began the year with a share price of 42 kobo. The firm has added 114 per cent to the price valuation YTD to close at 90 kobo.

The insurance stocks, hitherto perceived as penny stocks in the Nigerian stock market over the years, with consistent negative returns to shareholders, have become the toast of investors.

For instance, at the end of the 2018 financial year, Veritas Kapital Assurance Plc’s stock price declined by 2.88 per cent while Guinea Insurance’s stock price depreciated by 8.13 per cent in 2018.

Operators linked the unprecedented development to regulatory reforms and strategic initiatives by the National Insurance Commission (NAICOM), which have continued to reshape the sector and impact positively on the bottom line of the listed firms.

According to them, the capitalisation policies mandating increased capital bases for insurance firms have enhanced their financial stability and capacity to underwrite larger risks and improved investor confidence, contributing to better stock performance.

Also, efforts to deepen insurance penetration through public awareness campaigns, the introduction of innovative products and digital technology adoption have expanded the customer base, leading to increased premiums and profitability.

The stellar performance of these six listed firms showed that the improvement recorded in the sector in the past few years has translated to optimal efficiency in the operations of some of the practitioners and consequently forestalled stagnation in their share prices.

They expressed optimism that the sustainability of these initiatives would cause insurance stocks to remain a focal point for investors seeking high-growth opportunities on the NGX.

President of the Independent Shareholders Association of Nigeria, Moses Igbrude, said the insurance sector’s remarkable performance on the NGX is a testament to its resilience and strategic evolution.

According to him, as regulatory reforms continue to reshape the industry and digital transformation unlocks new opportunities, insurance stocks are well-positioned to sustain their growth trajectory.He also pointed out that this sector offers a compelling case for inclusion in growth-oriented portfolios.