Insurers conceal our benefits in blotted management expenses shareholders lament

CFI, Fola Daniel

Chuks Udo Okonta

Shareholders have alleged that some insurers deliberately stripping them of returns on investment by concealing their benefits in over blotted management expenses.

A top executive of a renowned shareholders group told Inspen that they are worried over the outcome on their investments in the insurance sector. He noted that while the shareholders are suffering due to lack of dividends and capital appreciation, insurance companies, yearly record huge management expenses.

He said shareholders have observed that most companies in a bid to deny shareholders of dividend conceal their profits in management expenses, adding that an urgent measure must be taken to check this menace perpetuated by these operators.

“Imagine, shareholders bought WAPIC Insurance shares at N13. Today, the price is just at the issuing rate. This is not good for a sector that wants to make progress,” he said.

He noted that prices of other sectors are gradually rebounding after the 2008 capital market financial crisis, but the price of insurance stocks has remained stunted, owing to investors’ apathy resulting from lack of returns on investment.      

A report obtained from the Nigerian Insurers Association (NIA) revealed that insurance companies spent N42.07 billion on management expenses in 2011, representing 19.32 per cent of the industry’s N217.74 billion gross premium income made in the year.

The report showed that Investment and Allied Insurance Plc, had the highest expenses, put at N158.39 million, as against N37.92 million premium income it recorded.   The firm was followed by Universal Insurance Plc with N347.73 million, as against N349.17 million (99.6 per cent) underwritten.

Custodian and Allied Insurance Plc, was the most prudent in the general business category with N886.81 million expenses out of the N10.06 billion (8.81 per cent) income. Mansard Insurance Plc had the lowest in the life business, with N13.87 million spent out of N 2.36 billion (0.6 per cent). Zenith Life Insurance Limited spent N9.61 million out of N1.01 billion.

Other firms with high expenses include, Cornerstone Insurance spent N1.13 billion out of N3.17 billion, Equity Assurance N1.07 billion out of N2.23 billion, International Energy Insurance N1.92 billion out of N4.61 billion, LASACO Assurance N1.20 billion out of N2.70 billion, NICON Insurance N1.05 billion out of N1.38billion, Niger Insurance N100 billion out of N3.04 billion, Standard Alliance Insurance N1.38 billion out of N4.76 billion.

Continuing, Unitykapital Assurance N1.08 out of N1.87 billion, NICON Insurance Life N154.51 million out of N246.55 million, UBA Metropolitan Life N973.15 out of N1.78 billion and Unic Insurance N375.31 million out of N464.30 million.

National Insurance Commission (NAICOM) has continued to express worry over the amount spent by underwriters on their management. The regulator claimed what ought to have been return on investment are used as operating expenses by some insurance companies.