We had expected that the year 2015 would herald a positive turnaround in the fortunes of the company. Unfortunately this did not materialise partly due to the difficult environment in which our Company operated in that year as a result of the uncertainty preceding the General Elections and other difficult industry challenges. Our strategy for recovery will be outlined later in this address.
The global economy had a subdued performance in 2015 with divergent outcomes in different economic blocks. Tumbling energy and commodity prices reduced growth in emerging markets like
Russia and Brazil and OPEC countries like Nigeria, Venezuela among others. Some emerging markets like India and Vietnam benefitted from the crash of commodity prices. Overall the world economy grew in 2015 by 3.1% against the 3.5% projected for the year.
The strain on the fiscal position of Nigeria continued in 2015 with further slide in crude oil prices. The period leading to the general elections was characterised by marked uncertainty which gave way to palpable optimism following the successful elections and transition to a new government, which has made combating corruption in high places the major plank of its economic recovery programme. The Government also outlined an agenda for diversification of the economy with agriculture, mining and services as priority. The security situation in Nigeria has improved with restoration of relative calm in the North-East, but there is fresh concern about security in the Niger Delta following the resumption of sabotage missions against strategic installations by the region's militants. It is hoped that Government will expeditiously address the security situation in that area.
The Nigerian insurance industry continues to adjust to the no-premium-no-cover policy introduced by NAICOM while challenges of unhealthy competition persist. The regulator is finalizing arrangements for the adoption of Risk-Based supervision which it hopes to launch in due course. All these will continue to impact on the fortunes of insurance companies.
As stated earlier, our overall results for 2015 fell below our projections.Gross premium income fell by 5.70% from N2.63 billion in 2014 to N2.48 billion in 2015.Profit before taxation increased from a loss of N123.01 million in 2014 to a profit of N130.36 million in 2015, a 206% increase while profit after tax increased by 158% from a loss of N165.43 million to a profit of N96.02 million over the same period.
Shareholders' Funds increased marginally from N3.10 billion in 2014 to N3.13 billion in the current year while retained earnings deficit reduced by 2% from N1.80 billion to N1.78 billion over the same period.The company continues to maintain a high level of liquidity, meeting all obligations as they fall
due and also continue to record a positive solvency margin.
In order to satisfy NAICOM's requirement for a minimum of seven Directors for insurance companies, our Board has appointed Dr. Solomon Adegboyega Alao, as a Director of the company, subject to NAICOM's approval, His appointment will be submitted for Shareholders' ratification after NAICOM's approval. Dr.Alao is an Associate of the Chartered Insurance Institute of London and a Fellow of the Chartered Insurance Institute of Nigeria. He brings to the Board decades of experience in Insurance, risk management and retirement operations. Dr Alao's appointment will come for ratification at this Annual General Meeting.
It is obvious that apart from macro-economic and industry challenges, your Board has tried to identify the internal factors hampering the growth in the company. As a result, a number of steps have been taken to reinvent our marketing strategies. One of the key factors limiting premium income growth is the low capital base of the company which is below the minimum set by major clients for participation in large risks. It is accordingly apparent that an increase in Share Capital is necessary. The Board has therefore initiated discussions that will lead to the injection of substantial new capital into the company on which shareholders will be informed soon.
I assure all Shareholders that their interests will be adequately protected in the process. The Board and Management of your company are fully committed to the growth of this company and are quite optimistic that these difficult times will soon be a part of history.
I take this opportunity to put on record my gratitude to our numerous clients, brokers, bankers, professional advisers, our consultants, regulatory authorities, our entire management and staff and, my Board colleagues for their efforts, guidance and co-operation.
I thank all stakeholders for their forbearance and understanding, and I assure them that we shall continue to strive for a better future for SterlingAssurance Nigeria Limited.
Thank you all.
PROF. THEO.A.J. OGUNBIYI THURSDAY, 14 JULY, 2016