AGM: Shareholders grumble over delay

 

By Zaka Khaliq                                                                                                                           Aggrieved shareholders of insurance companies are unhappy that majority of insurance companies in the country are yet to release their 2012 financial results.

When BusinessWorld contacted shareholders to know their reactions, they were unhappy that only one insurance company out of 58 underwriters has so far made its 2012 financial result public, pleading on the National Insurance Commission (Naicom) to speed up the process of approving the accounts of underwriters, so that shareholders would know the state of their investment.                                    

As it stands, only one insurance company (Mansard Insurance Plc) was able to do its Annual General Meeting (AGM), while others are still battling regulatory issues.

Most insurance companies are finding it difficult to file their 2012 financial results to the National Insurance Commission (Naicom) in International Financial Reporting Standard (IFRS) format. The regulatory body had given insurance firms June deadline to submit their 2012 IFRS accounts, of which only few of them were able to do so.

To this end, only 22 companies were able to submit their 2012 financial accounts to Naicom, although, the regulatory body had approved only five of these accounts.

The other 17 accounts, it was learnt, were queried by the commission. While some of them have responded to these queries, others are yet to do so.

BusinessWorld findings show that a whooping 36 insurance companies are yet to submit their financial accounts to Naicom because they are still struggling to submit in the right format, even though, few had issues balancing their books.

According to regulatory requirement, until Naicom approve any account, no insurance company is allowed to do its annual general meeting, hence, shareholders must exercise patience till the regulator gives their companies go ahead with the AGM.  

Speaking to BusinessWorld, on behalf of shareholders, Mr. Boniface Okezie, president, Progressive Shareholders Association of Nigeria (PSAN) said, the inability of insurers to release their accounts, is affecting the price of the listed insurance equities, with shareholders unwilling to trade on them.

He said: “Most of them could not declare dividend for a long time and now, the result is going to come late. It is not the best for insurance industry because shareholders always react to financial results to decide whether to trade on an equity or not.”                                         He blamed insurers for being too relaxed, especially, when it comes to timely release of financial statements, unlike their counterparts in banking sector and other sectors of the economy.

On the other hand, Okezie said: “The sector is lagging behind and Naicom must gear them up to do the right thing, such that investors that invested their hard earned money in these companies get values for investments.”  

He added that: “Moreover, the regulatory body should help underwriters to come up with their accounts on time. It should speed up the approval, instead of delaying the accounts or sending them back to the affected companies for corrections, especially, when auditors have already worked on these accounts. Once there accounts are not presented to the shareholders, their share prices would continue to dwindle on a daily basis.”

Industry source said some of the insurers may not be able to hold their annual general meeting this year, as they continue to battle regulatory issues.

To this end, it was gathered that the erring companies are currently paying penalty to Naicom, while the listed ones are equally being penalised by the Nigerian Stock Exchange(NSE) for failure to submit their accounts as and when due. 

The 36 erring underwriting firms, BusinessWorld learnt, are now paying N5, 000 to Naicom each day, after the expiration of the June deadline given to them to tender their accounts.                                                   

With this development, capital market analysts said, shareholders should not be expecting much from their respective companies, as most of them would have used a large chunk of their profits to pay penalties to both Naicom and NSE, therefore, unable to declare the expected dividend or bonus.

All these put together, suggests why the shares of the listed insurance companies could not increase beyond N1, as people continue to shun insurance stocks.               

Meanwhile, the approved accounts by Naicom are that of; Mansard Insurance Plc, ADIC Insurance, WAPIC Insurance Plc, Oasis Insurance Plc and Consolidated Hallmark Insurance, thus, can make their financial results public anytime soon.