Background
Cornerstone Insurance Plc is a Nigeria-based company. The Company is engaged in the provision of life and non-life insurance services for both corporate and individual customers.
The Company is engaged in various business lines ranging from property-casualty insurance, life/health insurance, asset management and leasing. The Company’s products are classified as insurance contracts or investment contracts. Its products include life insurance services, non-life insurance services, Halal takaful and financial services.
The Company operates through two subsidiary companies: Cornerstone Asset Management Limited and Cornerstone Leasing & Investment Limited.
The company has 8.80 billion shares with shareholders fund of N6.90 billion as at December 31 2013.
Financial results for 2013.
Cornerstone insurance Plc has proven that with an effective cost control mechanism, focus strategy, and innovative product range, a company can surge bottom line growth.
Despite numerous factors hampering the growth potentials and also restricting earnings of companies in the Insurance sector, the Nigeria Insurer’s FY13 results are impressive.
For the year ended December 2013, Cornerstone insurance Plc surged gross premium written by 15 percent year on year to N5.31 billion from N4.62 billion same period of the prior year (FY13).
However, Net profit income (NPI) decreased slightly by 5.65 percent in the review period to N2.68 billion compared with N2.84 billion as at FY13.
The drop in NPI could be attributable to a 15 percent rise in reinsurance expenses to N1.93 billion in 2013.
Profit before tax (PBT) spiked by 60 percent to N870.20 million as against N543.92 million as at FY2013.
It must be noted that the above increased profits is the higher among the insurance companies analyzed so far.
Profit after tax followed the same growth trend as it spiked by 68.56 percent in the review period to N860.36 million from N510.40 million as at FY2013.
The lack of exposure to financial services, including insurance, suggests the company needs to work harder and sell its products, educate the prospective client to its benefits if it wishes to continue on a growth trajectory.
In addition,
Based on BusinessDay analysis, the result beat expectations as some insurers have had profits crimped to by regulatory enforcement of No Premium, No Cover regulation.
This is a section of the 2003 Insurance ACT that stipulates that Premiums must be paid for before an insurer can incept cover. This regulation was enforced by the regulator (NAICOM) with effect from January 1, 2013.
The underwriting income also fell slightly by 2.65 percent year on year to N2.92 billion in FY13 from N3 billion as at FY12, while Net claim expenses surged by 16.75 percent to N1.15 billion in 2013.
Management expenses also rose slightly by 6.2 percent year on year to N1.57 billion in FY13 as against N1.48 billion as at FY12, while Operating expense ratio jumped to 58.58 percent in 2013 from 51.90 percent in 2012.
The company has been efficiently managed to generate higher profits as Net margins which is a gauge for this spiked to 32.1 percent in FY13 as against 17.92 percent as at FY12.
The overall efficiency of Cornerstone has impacted positively on the returns to shareholders given that return on equity (ROE) rose to 12 percent in FY13 from 8.46 percent as at FY12. Return on assets (ROA) also jumped to 6.08 percent in 2013 as against 4.19 percent in 2012.
Earnings per share EPS increased by 9.81k in FY13 from 5.82k as at FY2012.
Cornerstone’s total assets climbed by 12.17 percent year on year to N14.15 billion in FY13 compared with N12.17 billion as at FY12.
The increase in total assets is as a result of a 23 percent increase in finance assets to N4.66 billion in FY13 compared with N3.79 billion as at FY12, while reinsurance assets surged by 50.55 percent to N1.47 billion in 2013.
Share performance and outlook
The company’s share price closed at 50k on the floor of the Nigeria Stock Exchange (NSE).
Market capitalisation was N4.41billion on the same day.
BALA AUGIE
