Distinguished Shareholders, Colleagues on the Board of Directors, special guests, gentlemen of the press, eminent ladies and gentlemen, it is with much pleasure that I welcome you all to the 24th Annual General Meeting of your company where the Audited Annual Financial Statements and Annual Reports will be presented for your kind consideration.
I will now give an overview of the environment in which your company operated in the past year.
2017 BUSINESS OVERVIEW
On the economic front 2017 ended on a high note, with GDP continuing to accelerate over much of the world in the broadest cyclical upswing since the start of the decade.
Having struggled since the global financial crisis of 2008-2010, the global economy recovered firmly in 2017 on the back of the 3.2% growth for 2016. The global GDP growth rate for 2017 is estimated at 3.7%
The uncertainty of the EU/UK discussions on Brexit notwithstanding, the global growth resulted from higher commodity prices, a weak dollar and anticipation of tax cuts in the US (which were enacted before Christmas). Stock markets worldwide rallied.
Nigeria officially exited recession in the third quarter of 2017. There was an annual real growth of 0.83% in GDP in 2017 as against the 1.58% drop in 2016.The inflation rate which peaked at 18.72% in January 2017 was on a steady but slow decline in the year dropping to 15.37% at year end. There was a complete reversal of the low foreign exchange inflows, tight capital controls and currency volatility experienced in 2016, as the external reserves grew from US$26.263bn to US$38.767bn an increase of 47.7% year on year. The Nigerian All Share Index closed the year at 38,243.19 points a massive 42.30% growth over the 26,874.62 points it closed in 2016, making it the 2nd best performing exchange in the world in 2017.
There was relative stability in the value of the Naira in the second half of the year with the closing of the gap between the bank and parallel market rates. Government during the year successfully raised Eurobonds and Sukuk bonds to address the deficit in Government finances, as it intended to drastically increase the capital expenditure component of the budget. The MPR was left unchanged while yields on Short Term Govt securities rose to over 21% in some instances. This was to, as far as the monetary authorities were concerned, attract foreign capital and further reduce rate of inflation.
However, the delay in the signing of the 2017 budget meant that the expected trickle-down effect of the developments in the macro economy were not substantially felt in the economy. Though there were improvements on power generation, towards year end there was a widening deficit in supply of PMS. In addition, the unemployment situation in the country worsened.
On the industry level,the Regulatory Authorities, NAICOM, SEC and NSE continued their supervisory activities with the view to ensuring a robust and healthier insurance industry.
In addition, the National Insurance Commission came out with draft guidelines on Micro Insurance, Bancassurance and Takaful Insurance with the aim of deepening the insurance market.
2017 FINANCIAL HIGHLIGHTS FOR THE COMPANY
For your company, the year 2017 had been one of mixed fortune. There was an increase in the gross premium production from =N=3.101bn in 2016 to =N=3.368bn in 2017, an increase of 8.61%.
The effect of increased premium generation was however significantly eroded by the 117.46% increase in net claims, 18.08% increase in Underwriting expenses and 14.63% increase in Management Expenses when comparing the 2017 figures with that of 2016.
One salient result of the economic situation has been an increase in both the number of claims and value therein throughout the insurance industry. In 2017, there were huge claims pay-out in oil/gas, accident and motor classes.
There was an increase of 76.15% in the investment income of your company, which is reflective of the high deposit rates and Government yield rates offered during the year coupled with the effect of the increase in prices of equities held by the company which are quoted on the floor of the Nigerian stock exchange.
The resultant effect of this showed a decline of 58.25% in Profit after tax from =N=470.59m in 2016 to =N=196.48m in 2017. Though the drop is significant, your company’s fundamentals are still strong. It is expected that your company, building on the gains of past financial discipline and strategic positioning, will produce a better result in 2018.
The total asset base of your company grew by 5.7% from =N=6.856bn in 2016 to =N=7.248bn in 2017
For our group, the contribution of the subsidiaries to the overall profit after tax, after deducting that attributable to Non-Controlling Interests, decreased from =N=74.041m in 2016 to =N=23.369m in 2017.
The total assets for our group and your company as at December 31st, 2017 stood at =N=9.309bn and =N=7.248bn respectively.
As a way of appreciating our esteemed shareholders, your Board is recommending a total dividend payout of =N=200,062,500 representing 3k per 50k share for eligible shareholders. We believe that with your continued support and patronage, your company will succeedin paying dividend annually.
During the year, Mr. Akin Adelakun, the Executive Director (Operations), retired from your board and the employment of your company. He had served your company since its inception in 1994. While appreciating him for his immense contribution to the growth and development of your company, I want you all to join me in wishing him well in all his future endeavours.
With the economy poised for more growth in 2018, your company is reviewing its expansion programme to make it compete effectively in the insurance space. Your company also intends to increase its market penetration through the deployment of an e-commerce platform.
The Management and staff of your company are highly commended for their deep sense and display of loyalty, commitment, honesty and dedication to duty in the year. Their efforts in moving the company forward will always be recognised and adequately rewarded.
I must also appreciate our esteemed clients, agents and brokers for continuing to do business with us. We trust we have earned your enduring confidence and we look forward to your increased support and patronage going forward.
I want to assure you all that Regency Alliance Insurance Plc is here for the long haul. We have strong confidence that the dampened socio-economic climate is temporary and Nigeria remains a land of immense opportunities and prospects. Your company is positioned to make the best of the brighter future ahead. We will always be guided by our corporate ideals and values of Professionalism, Integrity, Commitment and Efficiency as we create wealth for all our stakeholders while mitigating all associated risks that may arise. That is our commitment to you our dear shareholders.
Amb. Baba Gana Kingibe (GCON)