The insurance sector of the nation’s economy has been described as performing below its potentials as the companies in the sector released the financial results to the public.

According to capital market operators the sector has not lived up to expectation despite high hopes by the shareholders during the recapitalisation exercise in the industry.

However, they believe that the sector still has more to offer as it is still performing below its potential on the Exchange in terms of capital appreciation and returns on investment to its shareholders.

Yomi Osunrinde, the General Manager of Integrated Trust and Investment Limited, stated that the poor performance of insurance companies is a reflection of what is happening in the economy.

Osunnde added that the global economic meltdown seriously affected the sector. He pointed out that the consciousness level of insurance in the country is still low, stating that by the time the need for insurance is made compulsory by the government the level of their profitability will go up and they will be able to generate a lot of income. He foresees bright prospect in the industry in the nearest future.

Also speaking, the Managing Director of Laksworth Investment & Securities Limited, Mr. Kayode Awotite, noted that insurance services cannot be likened to that of the banks.

Awotite agreed with Osunnde’s view that insurance companies should embark on enlightenment campaign to change the age-long perception that insurance companies find it difficult to remit premium as and at when due.

However, Mr. Emma Eze, a broker with DBSL Securities Limited, described insurance stock as penny stocks which are associated with low dividend payout.

He noted that all of them are kin a stable colum because their dividend and bonus is constant even though it may not be impressive.

Recently, Regency Alliance and Staco Insurance Plc released their audited results ended December 31, 2008.

Regency Alliance posted a turnover of N1.71 billion as against N1.21 billion representing an increase of 40.91%. the company’s profit after tax stood at N312.06 million compared to N237.54 million in 2007.

While Staco Insurance’s result showed a turnover of N4.38 billion as against N2.82 billion; its profit after tax was N543.42 million, down fromN758.01 million in 2007, indicating 28.44% drop.

Board of directors of both companies recommended a dividend of N0.02 and a bonus scrip issue of new share for every 10 shares held by shareholders.