Shareholders have faulted the style adopted by foreign investors to buy local insurance companies cheaply, leveraging on the unfavourable socio-economic scenario in the country.
Speaking during a courtesy visit of the members of the Insurance and Pension Editors of Nigeria (IPEN) to Independent Shareholders Association of Nigeria (ISAN) Secretariat in Oregun, Lagos, on Wednesday, the National coordinator, ISAN, Mr. Igbrude Moses described the situation, saying, the foreign investors are taking advantage of the nation’s bad economy, undervalued stocks and poor exchange rate to acquire local insurers at a cheap price.
According to him, “our economy is so bad that most of our stocks are undervalued, our exchange rate is so poor, such that, only a million dollar will translate to N700million, and if you have N700million, you can buy and have a stake in insurance companies.”
Stating that not all Direct Foreign Investment (DFI) was good for the Nigerian economy, he noted that, some of the portfolio investors come to take advantage of the weak laws and economy.
“What they do is to buy into firms and delist them from Nigeria Exchange, hence, becoming a private business and then, hide them from the eyes of the government and the next thing, you wouldn’t hear about the companies again,” he said.
Acknowledging the fact that there are still good investors, he appealed to the insurance industry regulatory body, that is, the National Insurance Commission (NAICOM) to allow only genuine investors into the industry, even as he urged the commission to put in place process to check activities of the fake ones.
On recapitalisation, Moses noted that, what was good for insurance industry is performance-driven recapitalisation. ‘When firms do well, they will make money themselves,’ he assured.
He stated that, there was the need for NAICOM to find out how firms utilise funds already at their disposal before thinking of further fund injection, adding that, there was no need of pumping excess money into companies.
Insisting that recent recapitalisation in the banking industry led to market crash, Moses strongly opposed recapitalisation in insurance industry, adding that, recapitalisation done in the past failed to yield any meaningful returns to shareholders. Operators, he said, took the opportunity of enriching themselves.
Also speaking at the event, the National secretary of ISAN, Mr. Chibuzor Eke, called on insurance industry regulator to provide enabling environment for insurance business to thrive. He equally challenged insurance firms to wake up and focus on their core business in order to attract investment.
He noted that, insurance business was quite challenging given the fact that operators were bent on playing with funds instead of focusing on their core business.
In other jurisdictions, he said, insurance firms own banks but in Nigeria, the reverse was the case.
Speaking further, Eze, who opined that shareholders were not gaining anything from speculative investment, noted that, they knew firms that are doing well and those that are not. Operators, he said, should stop enriching themselves, instead, consider the interest of shareholders who made investment to their firms.
Earlier in his presentation, the president of IPEN, Mr Chuks Udo Okonta said, the purpose of IPEN visit to ISAN was to seek a cordial media relationship with the association as well as allowed the shareholders to assess their investment in insurance industry. He promised that IPEN, as a body of insurance and pension editors is ready to reshape the two sectors through developmental journalism.
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