Staco Insurance Plc has raised a whooping N1.6 billion new equity fund from its recent special placement. This was concluded with the listing of the supplementary shares on the Nigerian Stock Exchange, NSE.
The insurance firm had floated a special placement of 4.0 billion ordinary shares of 50 kobo each at the nominal value of 50 kobo, to raise N2 billion new equity funds. Against the dormancy at the primary market, the insurance company recorded 80 per cent subscription rate.
A total of 3.2 billion ordinary shares of 50 kobo each that resulted from the special placement were listed at the weekend at 50 kobo per share. The addition of the new ordinary shares increased Staco’s issued share capital from 6.141 billion ordinary shares to 9.34 billion ordinary shares.
The new listing increased Staco’s market capitalisation to N4.67 billion. Staco, like most other insurance stocks, has remained dormant at its nominal value of 50 kobo as the insurance sector struggled with the hangover of assets mismatch and general slowdown in insurance and business activities.
The latest audited report and accounts of the company for the year ended December 31, 2015, showed that the insurance company recorded a gross premium income of N6.19 billion in 2015.
Staco’s net premium stood at N4.68 billion while profit before tax was N168.61 million. However, revenue declined by 3.9 per cent from N5.96 billion in 2014 to N5.73 billion in 2015.
Staco Insurance emerged in July 1994 as a result of discreet acquisition and restructuring carried out on Alpha Insurance Plc, which had been incorporated in Nigeria in 1991 and subsequently licensed to transact all classes of insurance business in October 1994. It commenced general insurance business and special risks under the new name in October 1994.
Most insurance stocks are still at their lowest prices. More than 53 per cent of insurance stocks are trading at nominal value of 50 kobo, 20 per cent are hovering around nominal value and only about 17 per cent are trading above 100 kobo mark. The seeming widespread downtrend in the sector is the hangover of the previous negative perception of the sector.
The losses and depressed balance sheets in the insurance sector were largely tied to the recession at the capital market. With huge funds raised during the capital market boom, and following the trails of squandering banks, insurance companies had turned mainly to the capital market to invest their bubble-induced assets.
Small and medium insurance companies, which had metamorphosed into big companies with outstanding shares and equity funds larger than size of business, left the conservative nature of risk assessment and provision-the core expertise of insurers, and turned into speculators.
