NEM Issuarnce Plc, one of the recapitalized insurance companies in the country is targeting a gross premium of N4.66 billion during the third quarters ending September 30, 2009.
In an official statement released by the Nigerian Stock Exchange (NSE) at the weekend, the company is also forecasting a profit after tax of N952.5 during the third quarter.
The company had recently recorded 67.1 per cent drop in profit after tax and 60.74 per cent drop in gross premium during the first quarter ended March 31, 2009.
The unaudited result of the company showed a profit after tax of N333.53 million for the first quarter as against N1.01 billion recorded in the comparable period of 2008, representing a drop of N1.6 billion as against N4 billion recorded in 2008 amounting to a drop of 60.74 per cent.
The audited result showed gross premium grew from N853.6 million in 2006 to N2.6 billion in 2007 while net premium income increased by 205.7 per cent from N818.3 million in 2006 in N2.5 billion recorded in 2007.
Profit after tax also rose from N8.7 million in 2006 to N399 million in 2007 while investment income also increased by 10.9 per cent, from N81.1 million in 2006 to N89.9 million in 2007.
Earnings per share (EPS) increased from 2.16 in 2006 kobo to 8.03 kobo in 2007 representing an increase of 271.8 per cent.
The company said deployment of new technology to improve on turnaround resulted into significant growth in all areas of its operation of the period.
But like every other insurance stocks the current bearish run in the Nigerian capital market is taking its toll on the share price of the company.
The company which had bottomed out at a low of 54 kobo per share during the sustained bearishness in the market, at the weekend traded in the negative direction with a loss of three kobo to close at N1.09.
However, Mr. Tunde Smart, managing director of the company reacting recently on the firms dwindling fortune in respect of profitability attributed the high percentage drop to the lingering capital meltdown occasioned by the global financial crisis.
Smart noted that the company’s investment in the market was a major factor that contributed to the drop in profit.
He said the capital market downturn affected every quoted company in the country which according to him Nem is not insulated from the Nigeria economy just like any other listed on the exchange.
“However, insurance stocks are not the worst hit as it affected all the stocks in the market. In relative terms, some banks stocks which sold as high and if you compare that to an insurance stocks that is selling for N4 and today is now sold for N2 or N1, you will see that we are not the worse hit. So you have to look at value prior to the meltdown and the value now and do arithmetic and you will agree with me that the insurance stock is not the worst hit in the market.
He however, expressed optimism that with the rebound of the market coupled with the company’s deployment of new technology, the drop will not affect the actualization of its target for the current year.
The company is targeting gross premium income of N5.5 billion for the current year and also forecasting the opening of more branches and off shore offices especially in Ghana “Am proud to tell you that as we speak now we have gotten our licence to operate in Ghana and we are already putting infrastructure in place, very soon we will launch out new office in Ghana,” Smart said.