Business
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The Royal Exchange financial report for the year ended December 31, 2013, showed that its profit before tax increased more than the previous year and that its shareholders are smiling to their banks with their dividends
| By Anayo Ezugwu | Oct. 13, 2014 @ 01:00 GMT |
DESPITE the hostile business environment experienced in the country by the insurance sub-sector, Royal Exchange Plc posted a profit before tax of N828.21 in its financial year ended December 31, 2013, 18 percent higher than the N703.09 million achieved in 2012. The shareholders of company are to receive a dividend of 5k per 50k ordinary share for the year under review.
The company disclosed this at its 2013 Annual General Meeting, AGM, held in Lagos, on Wednesday, September 24. During the year under review, Royal Exchange generated gross written premium of N9.08 billion, while that of the preceding year was N7.61 billion, an increase of 19 percent. Claims expense for the year amounted to N2.48 billion compared to N1.63 billion reported in 2012, signalling an increase of 52 percent. Underwriting expenses increased by three percent from N2.13 billion in 2012 to N2.20 billion in 2013. These translated into net income before overhead expenses of N3.40 billion, as against N2.67 billion in 2012. Management expenses were N2.53 billion in 2013 as against N1.98 billion recorded in 2012, showing an increase of 28 percent.
Kenneth Odogwu, chairman of the group, attributed the rise in management expenses to branch expansion, retail business development and investments in e-business and information development. He said the 2015 general elections would affect economic activities in the country. “The build-up to the 2015 general elections is expected to put considerable strain on economic activities in 2014 as business climate may give way to mainstream politics. Typically, we expect higher government spending in the 2014 proposed budget with the resultant restrictive monetary policy from the Central Bank of Nigeria, CBN, to maintain price stability,” he said.
According to Odogwu, 2014 would mark the first full operational year of the privatised power sector which is billed to catalyse the growth of local manufacturing and affiliate industries. “We foresee substantial growth in premium production stemming from the multiplier effect of stable energy generation and distribution in coming years and the industrialisation prospects in Nigeria. The oil and gas sector would continue to be a major contributor of premium to the insurance market next year, although government’s rigorous revenue diversification drive, away from volatile hydrocarbon exports, would open up manufacturing and agriculture as one of the new frontier markets.”
On his part, Chike Mokwunye, group managing director, said the company’s philosophy of delivering value to its shareholders without compromising on service standards remains sustainable. This, he said, was reflective on the performance recorded in 2013 as earnings per share rose from 11k in 2012 to 16k in 2013.
“Royal Exchange commenced operations for the year kicking off its three-year Strategic Implementation Programme tagged : ‘Road to 25’. This unique initiative – to be concluded in 2015 – is billed to have far-reaching transformative impact on our structure, operations and businesses and would reinvigorate our brand towards becoming a stronger, more market-oriented organisation with deeper tentacles in the financial services value chain; most especially in the areas of retail insurance, asset management and banking services. Our objective is to build an enduring business premised on’ efficient service delivery and sharper market responsiveness by leveraging on technology to strengthen our market penetration, product innovation and distribution channel,” he said.
However, some of the shareholders who spoke to Realnews, expressed confidence that the board will take the company to a higher level. Olufemi Timothy, a shareholder, said he was happy that the group is still paying dividends irrespective of the hostile operating environment in the insurance sub-sector. He called on the National Insurance Commission, NAICOM, to consider the interest of shareholders first in enacting its regulation, adding that the regulatory agency is killing the investments of the shareholders in the industry. Timothy urged to Royal Exchange to increase its net capita to N30 billion to enable it operate like a financial institution.
The company comprises Royal Exchange General Insurance Company Ltd, Royal Exchange Prudential Life Plc, Royal Exchange Healthcare Ltd, Royal Exchange Finance & Asset Management Ltd and Royal Exchange Microfinance Bank Ltd.
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Tags: AGM Annual General Meeting Chike Mokwunye Kenneth Odogwu Royal Exchange Finance & Asset Management Ltd and Royal Exchange Microfinance Bank Ltd. Royal Exchange General Insurance Company Ltd Royal Exchange Healthcare Ltd Royal Exchange Prudential Life Plc
