Home Insurance Digest Sovereign Trust Insurance goes for N15bn capital, grows profit by 157%

Sovereign Trust Insurance goes for N15bn capital, grows profit by 157%

Sovereign Trust Insurance goes for N15bn capital, grows profit by 157%

Sovereign Trust Insurance Plc appears set to challenge the market leadership of the nation’s insurance industry as its shareholders July 25, 2019 voted for a raise in the company’s paid up share capital to an all time high of N15 billion.

The N15 billion approved capital for Sovereign Trust Insurance represents an increase of 50 per cent when compared with the company’s current authorized working capital of N10 billion.

But the chairman of the company Mr. ‘Seun Ajayi was quick to state the tendency of Sovereign Trust Insurance to surpass the N15 billion mark hence he sort the approval of shareholders to retain any possible over subscription of the new shares which is soon to be put up for grabs by dedicated investors.

The pushup in the share capital of the company was part of the special resolutions adopted at Sovereign Trust Insurance 24th annual general meeting which held at the Civil Center in Lagos.

The move by Sovereign Trust Insurance to raise its paid up capital was to enable the company stay ahead of the insurance industry’s regulatory body, the National Insurance Commission (NAICOM) restructuring of the capital base of insurance firms up to the tune of N15 billion for all purpose insurance companies engaging in all classes of insurance including oil and gas, aviation and marine as well as engineering insurance.

Sovereign Trust Insurance said that it’s creation of 10 billion additional ordinary shares of 50 kobo each would be subscribed to whether through special placement or public offer with or without public offer with or without preferential allotment or rights issue or combination of any of them, either locally or internationally and upon such terms and conditions as the directors may deem fit.

“That in the event of oversubscription of the offer/issue to capitalize the excess money and allot additional shares tom the extent that can be accommodated by the company’s unissued share capital subject to the approval of the regulatory authorities”, the shareholders had further voted.

Chairman of the company had earlier to the shareholders that Sovereign Trust Insurance Plc has continued to maintain its path of profitability with a gross premium income of N10.5 billion in 2018, an increase of 23 per cent over the N8. 5 billion recorded in 2017.

“The net premium income equally grew by 13 per cent to N5.5 billion over the sum of N3.85 billion recorded in the corresponding year as we continue to improve on our business retention strategy”, Mr. Ajayi had revealed.

According to him, Sovereign Trust Insurance Plc recorded a pre tax profit of N202 million in 2018 business year as against the N540 million in 2017 representing an increase of 157 per cent. Net profit closed at N344 million, 118 per cent higher than the N158 million achieved in 2017.

“This indicates the commitment to sustain the growth of both revenue and profitability. Consequently, the return on capital employed recorded a positive performance of 9.29 per cent against 1.8 per cent achieved in the corresponding year of 2017. Similarly, the earning per share improved by 118 per cent from 1.89 kobo in 2017 to 4.13 kobo in 2018”, the chairman further submitted.

Investigation into the company’s balance sheet showed improved performance for the period under review.

While total asset rose from N10.8 billion to N11.3 billion representing 5 per cent increase, the shareholders’ fund increased by 6 per cent from N5.5 billion in 2017 to N5.8 billion in 2018.

“The increasing competition in our industry has consistently re-engineered our strategies and we will not rest in our oars. Our commitment to continuously take leadership in all our product lines remains unperturbed. The efforts of the tenacious Sovereign Trust team in achieving aggressive revenue generation are saluted”, the chairman added.

Mr. Ajayi observed that the recently passed minimum wage bill will in some measure improve the purchasing power of many Nigerians. This, he reasoned would translate in higher patronage for insurance products and services.

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