A cursory look at trends in the financial statements of Staco Insurance Plc over the past four years may explain why Sakiru Oyefeso, the Chief Executive Officer (CEO) of the firm was fired by the Board of directors of the company. The firm last released its results for the September 2017, period.
The Board of the company last week dismissed Sakiru Oyefeso as the CEO of Staco Insurance Plc on the grounds of financial misappropriation, abuse of office, and breach of corporate governance best practices.
In a notice at the Exchange, the company notified the shareholders that the Board of Directors at its meeting held in Lagos on July 30, 2018 passed the resolution to dismiss Oyefeso as the CEO of the company.
Oyefeso directly owns 522.97 million units of equity holdings in company, representing 5 percent voting right in the company’s outstanding shares of 9.341 billion units. BusinessDay checks show that the former CEO’s equity holdings in the company were 470.14 million units as at December 2015. That means he acquired an additional 52.21 million shares worth about N26.05 million (based on N0.50 share price).
The company’s financial assets were down 47.02 percent to N461.24 million in September 2017, from N871.06 million the as at December 2016. It also dipped by 27.47 percent to N149.03 million in 2015, as against N205.54 million as at December 2014.
The drop in financial assets can be attributed to a 83 percent slump in government securities to N68 million in September 2017 from N422.14 million the previous year, in a period of when yields on treasury bills were at an all-time high.
Another transaction begging for answers is the value of investment property, which has remained the same over a period of time.
Investment property was valued at N1.520 billion at December 2016, and same as at September 2017, which was the last time Staco Insurance has released its financial results.
The investment property is a landed property held for the purpose of capital appreciation. It is a bare land located at No 13 Glover Road, Ikoyi in Eti Osa Local Government Area of Lagos State, according to the company.
There is a negative asset to liability mismatch of N2.72 billion in September 2017 financials, and a negative mismatch of N2.14 billion as at December 2016.
There is an item of N1.60 billion in the books of the Nigerian insurer, being impairment loss on assets carried categorized as receivables.
Investors will want to know whether there has been a stress test on these assets since it is a recurring transaction.
Staco’s solvency’s ratio of 101.48 as at September 2017 is near the regulatory red-line of 100 percent, raising concerns about the risk management strategy of the insurer. Its solvency ratio of 65.69 percent in 2015 was below the regulatory threshold.
Drilling down the financial statement of the company shows there is an item of N3.26 billion financial liabilities, categorized as convertible bonds as at September 2017. These items have being recurring in the last four years.
For the past five years, Staco insurance has been recording negative retained earnings or accumulated losses, which means it has been recording operating losses more than profits throughout its existence.
IHEANYI NWACHUKWU & BALA AUGIE
