Insurance Stocks Lift NSE As NAICOM Increases Underwriters’ Capitalisation By Over 200%.
..push All Share Index to 1.74 percentage gain on Monday
By Chukwumah Kelechukwu
The insurance segment of the Nigerian Stock Exchange (NSE) reacted sharply to the new capital requirements of the industry, recording 1.81 percentage gains to push up the market’s All Share Index to 174 basis points or 1.74 percent to 29,374.47 points, up from 28,871.93 of the previous session.
On a day when most index segments of the market depreciated, the NSE Insurance gauge pooled a surprise 1.81 percentage increase to 116.73, up from 114.66 points while NSE Consumer Goods index rose 0.04 percent to 642.11, up from 641.87 points.
The appreciation of the insurance stocks came on the day the industry regulator, the National Insurance Commission (NAICOM) announced a new regime of capital base of over 200 percent Increase for the four units of the underwriting segment of the sub-sector.
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The eventual announcement of the new Capitalisation regime confirmed InsideBusiness’ report of December 23, 2018 and March 18 which duly informed the operators of the latest developments.
In a circular signed on behalf of the Insurance Commissioner by Pius Agboola, the Commission’s Director for Policy and Regulation, the new capitalisation for Life underwriters moved to N8 billion from the current N2 billion while general business underwriters will need to shore up their capitalisation to N10 billion from the current N3 billion.
For those transacting Composite Insurance business, they are required to increase to N18 billion from the current N5billion. Likewise others, reinsurance operators are also to go up to N20 billion from the present N10 billion.
In the circular referenced NAICOM/DPR/CIR/25/2019 and released May 20, the new capitalisation that excludes micro-Insurance companies and Takaful operators, takes effect immediately for new applicants while existing operators have till June 30, 2020 as the deadline to migrate to the new capitalisation regime.
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On the NSE on the opening of a new week, share prices of Linkage Assurance, NEM, Guinness and Dangote Flour rose 9.09 percent, 7.27 percent, 2.96 percent and 1.24 percent respectively, lifting the NSE Insurance Index and NSE Consumer Goods Index by 1.81 percent and 0.04 percent respectively.
Thus, the market capitalisation which measures value of traded equities rose by equal percentage with All Share Index (1.74%) to N12.938trillion up from N12.716trillion. Consequently, the NSE year-to-date losses moderated to 6.54 percent on Monday from 8.41 percent last Friday.
Total volume of equities traded plunged 5.43 percent to 214.42million but value of equities traded rose by 5.43 percent to N7.93billion in 4,644 deals.
Despite alleged shares manipulation levied against MTN Nigeria Plc, investors maintained positive disposition towards stock as the telecoms giant continued its upswing by maximum 10 percent daily gain.
A total number of 20 stocks recorded losses as against 17 gainers led by MTN Nigeria.
Except for NSE Insurance Index and NSE Consumer Goods Index which recorded gains, all other indices plunged with NSE Oil and Gas Index recording the highest decline of 1.11 percent to 255.89 points, down from 258.76.
It followed by NSE Banking Index with a 1.08 percent depreciation to 350.46, from 354.30 while NSE Industrial Index declined 0.04 percent to 1,053.75 from 1,054.20 points.
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