Sovereign Trust Insurance turns a new leaf, strategises better future
Joy Agwunobi
The recent 29th Annual General Meeting (AGM) of Sovereign Trust Insurance Plc, (STI) held in Lagos was indeed a celebration of victory as the company reversed to profitability, paying gross dividends of N426.7 million, to its shareholders at three kobo per share after some years of non-payment of dividends.
This is a strong indication that STI is on course to achieve its set goal of being among the best five insurance companies in Nigeria. It would appear that the future is bright for the company as the existing shareholders are solidly behind its future expansion and growth. This was reflected in the last Rights Issue floated by the company. It was a success as investors took up their Rights and, as a result, increased its paid-up capital.
This is happening at a time when the insurance industry is witnessing economic inflation, slow supply chain recovery, rising labour costs and extended recovery periods.
However, Sovereign Trust Insurance grew its insurance revenue to N19.3 billion in 2023 from N15.7 billion achieved in the year 2022, representing 23 per cent despite the harsh economic conditions prevailing in the operating environment. Other key indices recorded higher growth percentages during the year under review.
Addressing shareholders at the 29th AGM, the Chairman of STI, Mr. Oluseun Ajayi said, “It was indeed a challenging year for many businesses but the fundamentals of our company are strong, and this is buttressed by our capacity to remain profitable. With this result, we remain a profitable brand. We will continue to re-engineer our strategy in line with current realities and will not rest on our oars but continue to improve on our performance.”
Regulatory Environment
During the period under review, the regulatory environment became more intricate, focusing on insurer solvency, cyber incident disclosures and the application of generative Artificial Intelligence (AI) among other issues.
However, at the close of business in the year 2023, the Nigerian insurance sector achieved 35 per cent growth over its performance in year 2022 in terms of premium generation.
Specifically, from N736.2 billion recorded in 2022 to over N1trillion in 2023, thus, achieving the long-proposed N1trillion premium target set by the National Insurance Commission (NAICOM).
Also during the financial year, NAICOM licensed eight micro-insurers and four takaful companies, aimed at deepening insurance penetration and tackling financial inclusion in the insurance industry. The purpose is to increase insurance products and services as well as enhance local insurance capacity in the country.
Operating Results
A review of the company’s audited results for the year shows that STI grew revenue from N15.7 billion in 2022 to N19.3 billion in 2023 representing a 23.1 per cent increase. The Insurance Service Expenses in line with the new accounting standard also grew by 21.7 per cent, from N6billion in 2022 to N7.3 billion in 2023.
Similarly, Investment Income rose to N819 million in 2023 from N548 million in 2022 representing 49.3 per cent, while the company paid a total of N3.3 billion claims in 2023 in contrast to N3.2 billion in year 2022.
Total Assets recorded a growth of 33 per cent, specifically from N17.2 billion in 2022 to N22.8 billion in 2023 as total equity rose from N10.4 billion in 2022 to N13.6 billion in 2023, thus, showing an increase of 31 per cent. This is attributable mainly to the success achieved in the company’s Rights Issue exercise as well as a remarkable achievement in Profit before Tax (PBT) of N1.42 billion during the period under review.
Dividend Payment
A total of N426.7 million has been paid to shareholders as dividends for the 2023 financial year. This translates to three kobo per share as recommended by the Board of Directors and endorsed by the shareholders at the 29th AGM held in Lagos.
Speaking on dividend payment, in his statement delivered at the AGM, STI Chairman, Ajayi reassured investors that henceforth dividend payment would be a regular exercise. He also pledged that dividend payments would be upgraded during the current financial year, all things being equal.
The payment of dividends is not only a good omen but has also rekindled the hope of the investing public.
Ajayi says tested has swarmed out of trouble waters, ready to embark on aggressive expansion. To pave the way for this, the shareholders authorized and approved the cancellation of N385, 930, 572.00 billion shares into 771,861,334 Ordinary shares of 50 kobo each, being the total number of unissued Ordinary shares in the share capital of the company. A resolution was passed at the AGM, to this effect, thus, bringing the share capital of the STI, to N7.114, 069 billion.
Eyes N25billion capital base
The last Rights Issue exercise embarked upon by the company during the year under review recorded a huge success. Ajayi expressed profound appreciation to all the shareholders for the success.
He disclosed that N1.4 billion was raised during the Rights Issue, and as a result, the Paid-up capital has been increased to N7.114 billion.
However, he urged the investors to be prepared to raise the paid-up capital to N10 billion in the new year 2025, adding that members of the company should also get ready as there are plans for recapitalization of the minimum capital of the company to N25billion in the new year.
Unveils Specialised Products
Sovereign Trust Insurance have a variety of products tailor-made to meet the needs of its customers. It has also pledged to continue to deploy resources in line with its strategic blueprint to create more innovative and affordable products that will satisfy the needs and aspirations of customers.
According to the company, the strategic direction will be designed to proactively envisage the likely opportunities that are inherent in the industry and mitigate against possible threats that may adversely affect its operations in the coming years and beyond.
Meanwhile, Sovereign Trust Insurance is currently providing specialized insurance covers, which are: Personal Accident Insurance, Motor Insurance, Fire and special perils Insurance, Burglary Insurance, Engineering Insurance/Bond, Marine Insurance and Aviation Insurance.
Others include Contractors/All Risk Insurance, Group Personal Accident Insurance, Goods-in-Transit Insurance, Fidelity Guarantee Insurance, Money Insurance, Professional Indemnity and Builders Liability Insurance.
Also on the list are, Workmen’s Compensation, Industrial All Risk Insurance, Healthcare Professional Indemnity, Sovereign Wellbeing Insurance Scheme for the Family (SWIS-F), Easy Travel Insurance Cover (ETIC), Electronic Equipment Insurance, Energy Insurance, Machinery Breakdown Insurance and others.
Future Prospects
A big celebration is in the offing for members of STI, come January 2025 as it achieves three decades of operation in Nigeria.
Commenting on the event, the Chairman of the company said, “As we will be celebrating our 30th anniversary of being a strong brand in the insurance landscape in Nigeria come January 2025, I want to urge you all to keep believing in us as we continue to keep the dream alive in providing insurance and financial services of global standards.”
Ajayi added that with the help and support over the years by shareholders: ”We have come this far and we can only continue to count on you for the journey ahead as our destination begets a better hope for the future.”
Meanwhile, Nigeria’s huge economy and growing young population offer great incentives to businesses in the country. The potentials in the economy are enormous and if well harnessed with a high level of political stability as we have witnessed in the last 25 years of democratic governance, the opportunities will remain boundless.
All these will bring about renewed interest in the insurance industry with more participation from international investors.
Ajayi said, “We would continue to deploy resources in line with our strategic blueprint to create more innovative and affordable products that will continue to meet the needs and aspirations of our customers. Our strategic direction will be designed to proactively envisage the likely opportunities that are inherent in the industry and mitigate against possible threats that may adversely affect our operations in the coming years and beyond. My sincere gratitude to my colleagues on the Board for their unwavering interest in the affairs of the company. I equally would like to acknowledge the unrelenting enthusiasm and commitment of staff and Management to the success of our company. We have every reason to thank the Almighty God for being our pillar of support over the years.”