Share Activist Threatens Insurance Firms over Poor Dividend

The insurance industry may be heading for a collision with the shareholders soon if threatening signals emanating from the shareholders are anything to go by. Sounding a note of warning recently, Nonah Awoh, a shareholder activist and stock analyst lamented the ugly situation that pervade the sector where dividends are paid in kobo, a situation, he said amounted to a waste of investment. He condemned the excuses often advanced by insurers for their inability to pay dividends in naira as done by banks and other companies, while advising operators to adopt tougher debt control measures to reduce their creditors’ profile. According to the shareholders’ position, insurance companies have found it difficult to cross their traditional grounds of paying dividends in kobo notwithstanding the gains which recapitalization of the industry has brought into the insurance firms. As a way of checkmating the operators, the activist suggested the appointment of minority shareholders into the board of the companies while retiring the older ones. While it could be seen that some operators in response to shareholders’ protest have marginally increased dividends pay out from statutory provisions from their reserves, there is generally a drop from bottomline. Awoh threatened that shareholders will not hesitate to stone directors in the future if nothing was done to correct the situation. He decried payment of dividends in kobo, stressing that in the present day economy, paying dividends in kobo is tantamount to waste of funds invested on the part of shareholders. In an atmosphere of what shareholders call extravagance, the insurers, he noted, cannot afford not to increase dividends to shareholders.
Analysing the situation, the shareholder activist stated that a company that pays two kobo dividend to a shareholder who has 1,000 holdings would have only paid N18.00 dividend after removing all the deductibles such as tax and postage charges. Reacting to the failure of some of the insurance brokers to remit premium paid by the insured to the insurer, the analyst noted that when brokers refused to pay premium, investment income would remain stagnant. As a way of discouraging indebtedness on the part of brokers, Awoh suggested that insurance companies should devote a page of their annual reports to publishing debtor brokers, while urging them to drag such defaulters before the National Insurance Commission (NAICOM) for appropriate sanction. In disregard of explanations often advanced by underwriters, he noted that some of the brokers present fatter accounts than underwriting firms, a situation that neutralizes allegations often made against brokers as unfounded and a mere cover up.