With a resolve to being a leading brand, providing insurance and financial services of global standard, Sovereign Trust Insurance Plc has always demonstrated its readiness to rise up to the occasion at every point in time. In the same vein, the company has never looked back in ensuring that her numerous customers and stakeholders alike get good deals on their investment through the provision of innovative insurance and financial services that has been the hallmark of the company since inception.
Interestingly, the company is also looking ahead at controlling a significant share of the insurance market in Nigeria while exploiting the under-developed areas in the industry by introducing new and innovative products that are tailored at meeting the demands of the various insurance consumers.
To help in realizing the set goals, the company raised its paid-up share capital to N2.6 billion and its shareholders’ fund to N3.52 billion in the third quarter of last year. The latter is way above the N3 billion that is required to transact general insurance business in the country.
Shortly after the last consolidation exercise in the industry, Sovereign Trust Insurance transformed into a publicly quoted company and listed its shares on the floor of the Nigerian Stock Exchange (NSE). It subsequently enlarged its board composition, increased its workforce capacity with varied relevant professionals and has since been delivering efficient services to clients and other stakeholders in the insurance industry. The company has also spread its operations across the country with branch offices in all the major cities in the country.
Analysis of 2008 Q3 Report
For most insurance companies doing business in Nigeria, the third quarter of 2008 was a very challenging one. It was a period marked by the reality of the negative effects of the ongoing global financial crisis and the crash in the prices of shares of companies quoted on the floor of the Nigerian Stock Exchange (NSE).
The challenge was twofold. First, was the continuous fall in the prices of insurance companies’ stocks at the floor of the Nigerian Stock Exchange. The company’s stocks were not left out. This in itself constituted a serious problem for most Managers of companies in the insurance industry.
The second phase of the problem was the more troubling. This had to do with the fact that insurance companies worldwide invested a sizeable percentage of the funds at their disposal in the capital market. Same was the story in Nigeria. According to research findings, it was confirmed that insurers invested up to 32% of their resources on quoted stocks in the capital market with the remaining 68% invested in unquoted investments including unquoted equities, government and other corporate bonds, properties, etc.
Notwithstanding the travails of insurance companies in the third quarter of last year, Sovereign Trust Insurance was able to record meaningful appreciation in all its financial indices.
Its after tax profit for the third quarter of 2008 peaked at N529.73 million while shareholders’ fund in the company appreciated by 2.03% having been grown from N3.45 billion in the corresponding period of 2007 to N3.52 billion by September 30, 2008.
An analysis of the company’s Consolidated Accounts for the third quarter ended September 30, 2008 and made available to THISDAY indicated that the company in the quarter raked in gross premium income totaling N3.04 billion as against the N2.05 billion that was reported in the corresponding period of 2007, a 49.02% improvement. Within the same period, the company’s net premium income increased to N2.57 billion, a 56.71% improvement over the N1.64 billion recorded in corresponding period of 2007.
Total investment and other incomes generated by the firm in the third quarter of 2008 was commendably higher than what it posted in the third quarter of 2007 by as much as 50.23%, having improved from N155.96 million in the previous year to N234.30 million by the end of the third quarter of last year.
In the third quarter of 2008 as well, Sovereign Trust Insurance Plc also paid claims to the tune of N487.79 million, up from the N349.74 million that was paid out to various insured by the third quarter of 2007; surpassing customers expectations in this regard by as much as 39.47%.
The company’s profit before taxation in the third quarter of 2008 stood at N617.09 million, an improvement of 62.10% over the N380.69 million recorded in the corresponding period of 2007 while its profit after tax within the same period under consideration rose to N529.73 million, up from N333.10 million recorded in the third quarter of 2007; a 59.03% improvement.
Sovereign Trust Insurance Plc by the end of the third quarter of last year raised its capital base from N2.04 billion to N2.60 billion, a 27.45% increase and raised its contingency reserve by as much as 24.64% within the third quarter of 2008; moving it up from N302.88 million by the third quarter of 2007 to N377.51 million as at the end of September 2008.
The company’s short-term investments were also reduced by 28.60% while increasing its investments on long-term assets by 90.49 percent. Short term investments made by the firm as at September 30, 2008 peaked at N854.51 million as against N1.20 billion that was reported in the corresponding period of 2007 while investments in long term assets made by the firm increased from N523.93 million as at the third quarter of 2007 to N998.03 million by the end of the third quarter of last year.
Shareholders’ interest in the company rose by 2.03% within the period under consideration; it peaked at N3.52 billion up from N3.45 billion just as the firm’s total assets were raised by 7.29% from N3.98 billion as at the end of September 2007 to N4.27 billion as at September 30, 2007.
Rating and Award Nominations
Sovereign Trust Insurance Plc shortly after the recapitalisation process submitted itself for rating by an international financial rating agency, Global Credit Rating. The agency rated the company A-, attesting to its claims paying ability. Other considerations for the rating were its good mix of business across the risk classes, high profile multi national oil and downstream clients, increased underwriting capacity strengthened by its new capital base and the geographical diversification benefits gained from the merger partners during the recapitalisation exercise.
The solvency and liquidity state of Sovereign Trust Insurance Plc according to the rating organisation has been steady with its international solvency margin improving from 76% in 2005 to 126% in 2006. The agency also confirmed that the company met and even surpassed customers’ expectations in the area of prompt claims settlement.
Sovereign Trust Insurance Plc was nominated for the 2008 edition of the annual Nigerian Stock Exchange (NSE) President’s Award in the insurance category. It was also nominated for the prestigious THISDAY Award for the Company of the year 2008 in the Insurance category as it was the case in 2007. These nominations and other awards received according to the management of the company, is a confirmation of the firm’s rising profile in both the insurance industry and the capital market respectively.
Product Development
Determined to add transparent value to its customers, Sovereign Trust Insurance plc took its competitors by surprise when it introduced some of the cheapest retail insurance products into the Nigerian insurance market in the second quarter of 2008.
The products were Sovereign Trust Enhanced Motor Insurance Cover (STEMIC), Sovereign Wellbeing Insurance Scheme for the Family (SWIS-F) and Easy Trip Insurance Cover (ETIC).
These products according to the company’s management are the cheapest in their respective categories and meant to ensure adequate coverage of the generality of Nigerians, whether rich or poor. The products have received significant acceptance and patronage from various customers across the country within the short space of introduction and this trend has continued to the admiration of the management.
Meeting and Surpassing Stakeholders Expectations
The company was recently endorsed by practicing insurance brokers in the country as one of the companies that has been able to meet and even surpass clients’ expectations in the area of claims settlement at all times.
Speaking on behalf of his colleagues, the Managing Director of Industrial Risks Insurance Brokers Limited, Elder Darlington Omerekpe attested to the commitment of Sovereign Trust Insurance Plc to meeting its obligations to its various customers in times of distress.
He made this assertion during the presentation of the N122M claims cheque to Chemlap Nigeria Limited. “What happened is a confirmation of the confidence we (Insurance Brokers) repose in your organisation and the commitment on the part of your organisation has been very outstanding and highly recommendable”, he said.
Existing shareholders in the company also smiled home with bonus share of one ordinary share for every five held. All shareholders whose names appeared on the company’s register as at July 23, 2008 benefited from the largesse.
Sovereign Trust Insurance Plc also bankrolled the maiden edition of the Lagos International Jazz Festival last year, the first company in the Nigerian finance sector to bankroll this particular musical event. The project is affiliated to the Cape Town International Jazz Festival.
The company in 2007 entered into partnership with the organizers of the Diamond Awards for Media Excellence, DAME, by endorsing in perpetuity the insurance award for journalists covering the insurance industry.
It also entered into partnership with an indigenous sports development organisation, Avengers International Sports Academy with a view to helping in developing youths across the country and keeping them off the streets and out of trouble.
Even the physically challenged were not left out in the company’s bid to meet stakeholders’ expectations. It extended its hands of love and care to physically and mentally challenged children and other inmates of the Lagos based Hearts of Gold Hospice.
Prospects for the Future
Even with the crisis that engulfed the financial industry globally which continued through last year, the board and management of the company maintains high hopes for the future and that of the insurance industry in general.
The company believes that the future of insurance business in Nigeria is bright especially with the anticipated enforcement of the 45 percent local content policy in the oil and gas sector and the compulsory building insurances which would expectedly boost insurance income significantly.
It has therefore, taken strategic steps to strengthen its push for a huge chunk of the emerging markets. The company has also directed its employees to work hard in harnessing the emerging and latent opportunities in the economy, particularly in the oil and gas and emerging markets to ensure that it realizes its goal of becoming one of the first five non-life risk underwriting groups in the country.
Conclusion
The company’s 2008 third quarter financial report clearly indicates that Sovereign Trust Insurance Plc is one organization to reckon with when it comes to insurance business and delivering on stakeholders’ expectations in Nigeria. This goes a long way to confirm the viability and profitability of the company as well as the confidence reposed on its management and board by shareholders across the country.