With the completion of the acquisition of Fin Insurance by the Cornerstone Insurance Plc, the company’s board and investors have expressed optimism that the deal will, effect from next financial period, return the company to profitability as a result of complimentary values created by the new partnership in the areas of distribution channels, geographical spread and product opportunities among other values.
Cornerstone Insurance, also stated that the partnership deal, conceived in 2013 and concluded at the 22nd annual general meeting (AGM) of the company held in Lagos, would provide a significant boost in its balance sheet.
Making these projections at the 22nd AGM of the company held in Lagos, Cornerstone Insurance Chairman, Adedotun Suleiman, said: “Our partner, Fin Insurance Company Limited, creates complimentary values in such areas as distribution channels, geographical spread and product opportunities, among others.
Sulaiman, at the meeting, successfully secured the nod of the company’s shareholders to acquire 3.3 billion ordinary shares of FIN Insurance, which will make Cornerstone 100 percent owners of the company.
He noted that insurance sector operators have remained fragmented and there has been need for consolidation of the Nigerian insurance industry to fast track building scale and capacity.
He said this explained why Cornerstone Insurance concentrated efforts since 2013 to acquire Fin insurance to build a more robust entity.
“We have identified a company with complimentary attributes and values and at this meeting therefore ask for your approval to proceed with the business combination”, he said.
According to him, “Cornerstone continued to make strides in the execution of its five year strategic plan particularly in the area of retail distribution and Islamic insurance using its Takaful window.
“We are achieving this by forming value-adding and innovative partnerships and alliances across different sectors.”
Announcing the company’s performance for the year ended December 31, 2016, Suleiman said that despite the harsh economic environment, the company, had sustained its growth trajectory by increasing its gross premium written by 25 percent, from N7.3 billion in 2015 to N9.1 billion in 2016.
Giving the breakdown of the company’s activities that led to this achievement, Suleiman, said sales from retail customers of the company accounted for 25 percent of the premium while special risk products to the oil and gas and engineering sectors contributed the second highest proportion of 23 percent.
He however expressed the regret that high claims, inflation and the security challenges in the North East and South- South Zones of the country led to a significant deterioration in the company’s claims experience during the period.
“Gross Claims for the year, total led N4.5 billion representing an increase of 61 percent from the previous year’s figure of N2.8 billion driven largely by deaths claims from the group life, credit life and third party motor classes of insurance”, he stated.
The Cornerstone Insurance boss, however, said despite the modest growth in revenue achieved by the company, the combined effects of the harsh macroeconomic environment, high claims cost, rising inflation and benign investment income, led to a reported loss before tax of N1.26 billion by the company.