Cowry Asset highlights underperformance of insurance in financial services sector
By Cynthia Ezekwe
Johnson Chukwu, founder and chief executive officer of Cowry Asset Management Limited, has described the insurance sector as the “poor cousin of the financial services sector”, after it emerged the worst performing index among other sectoral indices, with a year-to-date performance of 1.81 percent in the first quarter of 2023.
Speaking during the company’s presentation of the first quarter report of Nigeria’s economic landscape performance, Chukwu observed that the sector has remained backward by a couple of factors, which includes confidence of the insurance public, or the willingness of the insurance public to pay claims, poor capitalization, and not very strong regulation.
“The insurance industry, which is actually bigger than the banking industry in some countries today, remains the poor cousin of the financial industry, given that they have become smaller than the telecom industry decades after the insurance industry,” the CEO said.
The investment banking firm, in its report titled, “Nigerian Economic Landscape: An Overview of Q1 2023”, stated that the best-performing stock in the insurance sector is International Energy Insurance, which recorded a YTD performance of 239 percent as a result of the buying pressure following news of its acquisition by Norrenberger.
“The underwriter firm developed its five-year growth plan on the back of market innovation, value creation for stakeholders and policyholders, strategic business expansion, brand equity, and quality people to drive its return to the industry in great style,” the report stated.
On its outlook for the year, the report projected that the rest of 2023 would have more sell-offs if the insurance sector does not work on her policies and delay releasing her financials for investors to peruse.
It also noted that the continuous delay in approving the proposed Insurance Amendment Bill into law may have far-reaching consequences for the sector’s prospects, noting that it is only when the bill is passed into law that the insurance industry in Nigeria can be assured of being on the path of transformation.
The Cowry Asset CEO called on the incoming administration to critically examine the factors hindering the growth of the insurance sector, while emphasising on the need to work on the capitalisation of the insurance industry.