Cornerstone Insurance Plc has commenced a strategic move towards positioning itself as one of the top notch insurance institutions in Nigeria with its resolve to push up its working capital to an all time high of N20 billion.
The quest for a N20 billion capitalized Cornerstone Insurance Plc was concretized in Lagos Wednesday, August 21, 2019 when shareholders of the company unanimously endorsed the proposal for a capital raise which was proposed by the company’s board of directors headed by the company’s chairman Mr. Segun Adebanji .
Mr. Adebanji had earlier told the shareholders at the Cornerstone Insurance’s 27th annual general meeting that the company will achieve the capital increase through sundry options including but not limited to public or private share offer, rights issue or other methods with or without preferential allotments either locally or internationally at such dates and on such terms conditions to be determined by the board.
Consequently, Cornerstone Insurance Plc would be creating additional 40 billion ordinary shares of 50 kobo each. The value of such shares is to run pari passu in all respects with the company’s existing shares.
“The board of directors has met to consider our strategic options and plan is in place to ensure that we continue to participate fully and actively in the industry after the June 2020 deadline” the chairman had assured.
But shareholders were quick to remind the board of the need to protect the interest of minority shareholders against the fear that the call for additional capital injection could open up the company for foreign investors to hike its structure thus downgrading the shareholders who have nurtured to company to its present level of profitability .
“We will comply with the minimal disruption and dilution of existing shareholding structure”, the Group Managing Director of the company Mr. Ganiyu Musa had assured.
Cornerstone Insurance was incorporated on July of 1991 as a private limited liability company. The company was converted to a public limited liability company on June 17, 1997.
Reviewing the Cornerstone Insurance Plc’s 2018 financial report, the chairman revealed that the company posted N11.5 billion Gross Premium Written. The chairman declared that the company has continued to record growth in revenue, despite challenging market conditions.
According to him, the N11.5 billion represented an increase of 25 per cent when compared with the previous year’s result.
An inquiry into the company’s trading result revealed that the largest contributor to the 2018 result was the Group Life portfolio which contributed N2.01 billion representing 17 per cent of total gross written premium.
The Life Insurance portfolio recorded a growth of 48 per cent from the previous year, stressing that this growth was driven by regulatory changes to Group Life Insurance pricing limits and the introduction of a new product targeted at retail segments and that the Individual Life Insurance portfolio grew by 370 per cent from the previous year (N621 million in 2018 from N132 million in 2017).
“The Engineering, Oil & Gas product segments continued to dominate our General Business portfolio with a combined contribution of 57 per cent of General Business Premiums (N4.13 billion), giving credence to the emergence of Cornerstone Insurance as a leading Special Risks Underwriter.
“A review of our overly prudent Claims reserving methodology during the year saw our Gross Claims Incurred for the year drop to N4.53 billion from N7.74 billion in the previous year, aligning more with the Industry average.
“In accordance with the provisions of IFRS 11, the completion of our Head Office building which had been represented as a non-earning asset in our accounts unlocked some value and contributed N2.31 billion to the Group’s profit. Nonetheless, the Board of Directors and Management did not relent on the cost control measures put in place in the previous year and our efforts reduced Operating and Personnel expenses by 13% from N3.09 billion in 2017 to N2.69 billion in 2018,” the chairman had reported.
Mr. Adebanji said that the cumulative effects of the strategic focus on the company’s key growth drivers resulted in a return to profitability in 2018, adding that Profit before Tax for the year 2018 stood at N2.66 billion after a period of losses.
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