Dear esteemed shareholders, distinguished guests, ladies and gentlemen. It is with great pleasure that I welcome everyone to the 20th Annual General Meeting of the Company, Standard Alliance Insurance Plc. Moreover, it is a welcome privilege to address this Meeting for the ï¬rst time in my capacity as the Chairman of the Board of Directors.
WORLD ECONOMY 2015 was a year of mild retreat in the global economy, with growth slower than in 2014. Oï¬ƒcial data of the IMF recorded a global growth of 3.1% in 2015, versus 3.4% posted in the prior year. Economic performance exhibited uneven growth across the major economic blocs of the world, with the advanced economies posting rather weak and fragile improvements in growth (1.88% in 2015, versus 1.84% in 2014), in the face of noticeable but receding growth (4.0%, versus 4.6%) by the emerging market economies. Sustained growth in the advanced economies was anchored by the economies of the US, UK, and Spain. But the emerging markets growth tempo was shaped largely by conditions in the BRICS economies, with the large demand nations boosting growth, at 6.9% in China and at 7.3% in India, whereas the commodity economies were eroding the growth, at -3.8% by Brazil and at -3.7% by Russia.
Global ï¬nancial markets equally displayed mixed paths, especially in policy priorities. Monetary policy in advanced economies remained very accommodative, but with asymmetric stances. In 2015, the US Federal Reserve did not conduct QE asset purchases but rather, it raised policy rates for the ï¬rst time since 2009 ï¬nancial crisis. The ECB and the Bank of Japan continued their asset purchase stimulus packages, even as the former further lowered rates and the latter announced negative interest rates on bankers’ reserves. Monetary policy stance in the emerging markets was uncoordinated, with prominent commodity nations raising policy rates to combat currency depreciation, but China, India and Indonesia easing their policy climates.
Real growth in the Nigerian economy fell by nearly 55%, from 6.2% in 2014, down to 2.8% in 2015. This performance reï¬‚ects the buildup eï¬€ects of a pricing collapse of over 66% in global energy markets since Q4/2013, and brought to fore the dangerous exposure of Nigeria to oil. Meanwhile, Nigeria’s economic growth proï¬le since Q4/2014 mirrors those of other energy-dominant exporters, namely Russia, Brazil, and Angola.
According to oï¬ƒcial data released from the National Statistician, the 2.8% growth was anchored by non-oil activities, which grew at 3.75%, compared to petroleum activities which saw a sector GDP collapse of â€“5.45%. In real terms, the Nigerian economy has oï¬ƒcially evolved into a services economy, as seen in a 53% GDP share for the services sector, comprising activities in telecoms & ICT, trade, transportation, ï¬nance, insurance, real estate, entertainment & media, and public social services.
Election spending and a surge in food prices in the course of the year ignited some mild inï¬‚ationary pressures. By midyear, consumer inï¬‚ation rose to 9.2% (up from 8.0% in December 2014), so that the CBN missed its benchmark inï¬‚ation target range of 6% to 9%, the ï¬rst time to do so in two straight years of prudent price management. The global oil market rout of 2014 proceeded into 2015, with more severity, as evidenced by a 56% collapse in crude oil prices between January 2014 and January 2015. By February 2015, the CBN was eï¬€ectively forced to allow the oï¬ƒcial market to absorb a 19% devaluation of the Naira, in order to match the parallel markets rate of about N198 to the US Dollar.
Initially, the macroeconomic picture remained unclear for most part of the ï¬rst half of 2015. But by Q4/2015, year-on-year quarterly GDP growth rates were collapsing continuously, crude oil prices had fallen by a further 23% over January 2015 levels, a faster depletion had brought net external reserves down to a monthly average of about US$29 billion (from about US$34 billion in Q4/2014), the equity market index had lost over 17% on its January 2015 levels, and the parallel FX market was further pricing at N258, eï¬€ectively a devaluation premium rate above oï¬ƒcial markets of about 32% over the aligned January 2015 US Dollar rate. In its last MPC meeting in Q4/2015, the CBN responded to these macro developments by an accommodation stance, by adjusting the MPR down to 11% from 13% and cutting the CRR from 25% to 20%, in order to release some liquidity to support nonâ€“oil sector growth and jobâ€“creation.
Running in parallel to the macroeconomic management challenges were a pockets of political and structural economic logjams. The spate of insurgent extremist attacks showed only little signs of abating (Northeastern Nigeria was essentially oï¬€ the corporate logistics map). Moreover, the new administration was unable to constitute a ministerial cabinet for nearly six months. Businesses equally suï¬€ered from some structural problems caused by very low power supply and disordered fuel products distribution arrangements. Essentially, the year 2015 was made much more diï¬ƒcult in equal proportions by both domestic and external conditions, and these forced on the economy the sharp collapse in real growth, from 6.2% to 2.8%.
Against the background of a complicated national economic environment in the ï¬nancial year 2015, the Group’s ï¬nancial results are hereby presented. The Group posted gross premium income of N5.426 billion, an underwriting proï¬t of N1.234 billion, and a proï¬t before tax of approximately N819 million. Our balance sheet assets stood at N11.79 billion, with approximately N4.65 billion of these being ï¬nanced by shareholders’ equity funds. I am conï¬dent to inform you that our Executives and Management Staï¬€ have put in eï¬€orts and commitments to put the Group on a solid footing, upon which the combined market strengths of the life and general wings of the Group will be harnessed in the immediate midterm for business growth and value generation for stakeholders.
During the ï¬nancial year 2015, we did not witness any changes in the composition of the Board, either at the Group level or within any of Â the constituent entities of the Group, a reï¬‚ection of the eï¬€ective boardâ€“level mechanisms that were put in place at the beginning of the ï¬nancial year.
2016 DEVELOPMENTS AND FUTURE OUTLOOK An industry development of signiï¬cance in the current year 2016 is mandatory corporate governance change, under NAICOM rules. The regulator has required that non-executive directors of insurance companies that have served up to the maximum length of nine years should vacate Board membership. This requirement led to the painful departure of our immediate past Chairman, Brigadier â€“General Dominic Oneya (Rtd.), who occupied that position since December 2014, and has been a director of SA Insurance Plc since 2005. On behalf of the Board of Directors, I wish to express sincere appreciation for his tireless eï¬€orts and the excellent service that General Oneya has put in the services of the Company. Please join me and other Board Members in wishing him well in all his future endeavors. In his place, the directors have considered and approved my appointment as the Chairman of the Board of Directors from March 2016.
The outlook of the Nigerian economy is both positive and pragmatic. The 2016 federal budget was belated but has now been signed into law. In 2016, we expect the federal government to be able to work tenaciously at its reform and change agenda, and we will not rule out the possibility of some quick wins in the areas of power supply and fuel products distribution. We expect public ï¬nance conditions to be tied to OPEC decisions on output cuts, and so the logical but pragmatic outcome might be any of increase in the national debt or of consumption taxes, or both. Insurance businesses have learnt lessons on the precarious linkages between their earnings and the fortunes of Nigeria’sÂ petroleum sector. We expect the insurance landscape to be boosted by government oï¬ƒcial eï¬€orts and from emerging prospects of the nonâ€“oil sectors of the Nigerian economy.
The Group is wellâ€“positioned to take advantage of the competitive terrain, and you will be made aware of the progress on the eï¬€orts and directions of the Executives and Management Staï¬€ of the Group.
I wish to place on record my heartâ€“felt appreciation (as well as the Board’s) of the loyalty of our numerous customers who have continued to trust our brand. I also wish to express my appreciation (and that of the Board) of the patronage we continue to receive from our insurance brokers, and of the mutual respect and understanding that are extended to us by our business allies.
Members of the Board of Directors are equally appreciated, for making themselves available in the services of Group in one form or the other. During the ï¬nancial year, members of staï¬€ in the Group have put in invaluable eï¬€orts, commitments, and sacriï¬ce, be it in marketing or support activities, and these service activities I do highly appreciate, in my capacity as the Chairman.
Lastly, let me thank everyone of you, our valued and esteemed shareholders, for entrusting the Board of Directors with the aï¬€airs of the Group, and for your attendance at the 20th Annual General Meeting of Standard Alliance Insurance Plc.
Thank you all and God bless.
MR. JOHNSON EGU CHUKWUÂ