Economy
GCR Affirms AIICO Insurance A(NG) Rating
By Dipo Olowookere
Global Credit Ratings has affirmed the national scale claims paying ability rating assigned to AIICO Insurance Plc of A(NG), with the outlook accorded as Negative.
GCR explained in a statement yesterday that the rating was affirmed because the insurer’s assets continue to be conservatively managed, with the bulk of investments in risk free Federal Government of Nigeria (FGN) bonds and treasury bills.
It noted that in this regard, cash and equivalent constituted about 83 percent of the investment portfolio at FY16, translating into a strong coverage of technical provisions (1.2x) and average monthly claims (48 months).
This is supported by sound asset liability matching for the long term business, as confirmed by the actuarial valuation report. Key liquidity measures are likely to register within a sound range over the rating horizon.
Capitalisation has moderated over the review period as sustained losses eroded the capital base. In this respect, consolidated capital declined to N7.6 billion at 3QFY17 from N7.9 billion at FY16 compared to N11.6 billion at FY12.
It said while the solvency levels in the short term business remain strong, the long term business evidences material capital shortfalls, especially considering the scale of the book.
However, comfort is derived from the sound asset liability matching, with bulk of the policyholders’ liabilities backed by risk free FGN bonds. Furthermore, statutory solvency on a consolidated basis reflects adequate coverage of assets over liabilities at FY16.
AIICO Insurance has evidenced notable earnings volatility throughout the review period, underpinned by a relatively elevated cost structure, coupled with the declining premium base and an increasing claims level.
Although FY16 reported a significant increase in operating profitability (underpinned by reserve releases due to the slow down on annuity uptake), this was eroded by the net losses on available for sale assets during the year. Going forward, the inherent variability in overall cost structure might continue to impact on the insurer’s earnings capacity, albeit, net profitability is expected to be supported by sound investment returns.
Notwithstanding the consistent decline in gross premiums for the short term business, AIICO’s competitive position remains moderate.
In this regard, consolidated premiums registered a compound annual growth rate of 6.3 percent for the five-year review period, albeit with a declining market share of 8.1 percent in FY16 (FY15: 11.3 percent).
GCR said going forward, continued focus on long term business, coupled with expanded retail exposure may gradually enhance the business profile.
AIICO’s reinsurance program consist counterparties with a sound aggregated credit profile. Note is taken of the elevated level (13 percent) of deductibles per risk and event relative to capital at FY16.
The rating agency said an upward movement of the rating or outlook may follow a sustainable strengthening of solvency metrics and business profile, coupled with the maintenance of liquidity metrics at strong levels.
Conversely, downward movement may result from a sustained weakening in capitalisation levels, and a significant loss of market share or sustained poor operating performance.
By Adedapo Adesanya
The duo of Afriland Properties Plc and Geo-Fluids Plc crashed the NASD Over-the-Counter (OTC) Securities Exchange by a marginal 0.06 per cent on Wednesday, December 11 due to profit-taking activities.
The OTC securities exchange experienced a downfall at midweek despite UBN Property Plc posting a price appreciation of 17 Kobo to close at N1.96 per share, in contrast to Tuesday’s closing price of N1.79.
Business Post reports that Afriland Properties Plc slid by N1.14 to finish at N15.80 per unit versus the preceding day’s N16.94 per unit, and Geo-Fluids Plc declined by 1 Kobo to trade at N3.92 per share compared with the N3.93 it ended a day earlier.
At the close of transactions, the market capitalisation of the bourse, which measures the total value of securities on the platform, shrank by N650 million to finish at N1.055 trillion compared with the previous day’s N1.056 trillion and the NASD Unlisted Security Index (NSI) went down by 1.86 points to wrap the session at 3,012.50 points compared with 3,014.36 points recorded in the previous session.
The alternative stock market was busy yesterday as the volume of securities traded by investors soared by 146.9 per cent to 5.9 million units from 2.4 million units, as the value of shares transacted by the market participants jumped by 360.9 per cent to N22.5 million from N4.9 million, and the number of deals increased by 50 per cent to 21 deals from 14 deals.
When the bourse closed for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units valued at N3.9 billion, followed by Okitipupa Plc with 752.2 million units worth N7.8 billion, and Afriland Properties Plc 297.5 million units sold for N5.3 million.
Also, Aradel Holdings Plc, which is now listed on the Nigerian Exchange (NGX) Limited after its exit from NASD, remained the most active stock by value (year-to-date) with 108.7 million units sold for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 billion.
By Adedapo Adesanya
The euphoria around the recent appreciation of the Naira eased on Wednesday, December 11 after its value shrank against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N5.23 or 0.3 per cent to N1,547.50/$1 from the N1,542.27/$1 it was valued on Tuesday.
It was observed that spectators’ activities may have triggered the weakening of the local currency in the official market at midweek as they tried to fight back and ensure the value of funds in foreign currencies strengthened.
The domestic currency was regaining its footing after the Central Bank of Nigeria (CBN) launched an Electronic Foreign Exchange Matching System (EFEMS) platform to tackle speculation and improve transparency in Nigeria’s FX market.
At midweek, the Nigerian currency depreciated against the Pound Sterling by N3.56 to close at N1,958.68/£1 compared with the preceding day’s N1,955.12/£1 and against the Euro, it slumped by 34 Kobo to trade at N1,612.66/€1, in contrast to the previous session’s N1,613.00/€1.
As for the black market segment, the Naira lost N45 against the American currency during the session to quote at N1,670/$1 compared with the N1,625/$1 it was traded a day earlier.
A look at the cryptocurrency market showed a recovery following profit-taking as the US Consumer Price Index report matched economist forecasts.
The news was enough to convince traders that the Federal Reserve is certain to trim its benchmark fed funds rate another 25 basis points at its meeting next week.
The move also saw Bitcoin (BTC), the most valued coin, return to the $100,000 mark as it added a 2.9 per cent gain and sold for $100,566.12.
The biggest gainer was Cardano (ADA), which jumped by 15.00 per cent to trade at $1.16, as Litecoin (LTC) appreciated by 10.4 per cent to sell for $121.76, and Ethereum (ETH) surged by 7.0 per cent to $3,929.30, while Dogecoin (DOGE) recorded a 6.7 per cent growth to finish at $0.4181.
Further, Binance Coin (BNB) went up by 5.2 per cent to $716.72, Solana (SOL) expanded by 4.6 per cent to $229.77, and Ripple (XRP) increased by 4.2 per cent to $2.43, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.
By Aduragbemi Omiyale
The Dangote Refinery located in the Lekki area of Lagos State has made its first export of premium motor spirit (PMS) just three months after it commenced the production of petrol.
In September 2024, the refinery produced its first petrol and began loading to the Nigerian National Petroleum Company (NNPC) on September 15.
However, due to some issues, the facility has not been able to flood the local market with its product, forcing it to look elsewhere.
In a landmark move for regional energy integration, Dangote Refinery has partnered with Neptune Oil to take its petrol to neighbouring Cameroon.
Neptune Oil is a leading energy company in Cameroon which provides reliable and sustainable energy solutions.
Dangote Refinery said this development showcases its ability to meet domestic needs and position itself as a key player in the regional energy market, adding that it represents a significant step forward in accessing high-quality and locally sourced petroleum products for Cameroon.
“This first export of PMS to Cameroon is a tangible demonstration of our vision for a united and energy-independent Africa.
“With this development, we are laying the foundation for a future where African resources are refined and exchanged within the continent for the benefit of our people,” the owner of Dangote Refinery, Mr Aliko Dangote, said.
His counterpart at Neptune Oil, Mr Antoine Ndzengue, said, “This partnership with Dangote Refinery marks a turning point for Cameroon.
“By becoming the first importer of petroleum products from this world-class refinery, we are bolstering our country’s energy security and supporting local economic development.
“This initial supply, executed without international intermediaries, reflects our commitment to serving our markets independently and efficiently.”
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