NIC IPO: Another investment
Jan 07, 2010
MARKET INTELLIGENCE<br><br>DESPITE the launch of the leading provider of insurance and risk management services firm’s initial public offer (IPO), doubts still remain on the role a Ugandan investors will play.
MARKET INTELLIGENCE
By Ibrahim Kasita
DESPITE the launch of the leading provider of insurance and risk management services firm’s initial public offer (IPO), doubts still remain on the role a Ugandan investors will play.
The National Insurance Corporation (NIC), the largest insurance company by assets and profitability, is offloading 40% of the Government’s stake to investors in a 26-day public offer that started last week.
IGI, a Nigerian insurance company, is the majority shareholder with 60% of NIC shares.
In an effort to promote part-ownership of public business entities by citizens, the Government is selling its 161,552,000 ordinary shares in NIC, representing 40% of the issued share capital of the company.
The NIC IPO follows a decision in June 2005 by the Government to sell its 60% shareholding in NIC to IGI.
The public offer has been set at a subsidised price of sh45 per share.
The minimum purchase is 2,000 shares worth sh90,000. This gives ordinary Ugandans an opportunity to participate in the divestiture of the firm.
In recognition of their contribution towards the growth of NIC over the years, 4% of the issued shares have been reserved for permanent employees of NIC at the IPO price.
NIC listing has been an on-and-off affair for the last three years, disrupted by the dispute over the Makerere Univeristy pension’s fund.
The insurance company was established as a state-owned entity in 1964.
Within three years of privatisaton, according to Elias Edu, the corporation secretary of NIC, the insurers’ premium income grew by over 100% from sh6.5b to sh13.7b in 2008.
“Within the same period, profits after tax grew from sh981m in 2005 to sh2.6b in 2008,†he said.
“Total assets grew from sh50.2b in 2005 to sh75b in 2008.†Edu also said investment income rose from sh1.9b in the last three years to sh3.7b in 2008. The firm has expanded its branches across the country with over 10 branches and area offices and over 24 outlets nationwide.
Despite the credit crisis and local operational challenges, Edu explained that NIC proved its resilience by recording a modest growth in gross premium income from sh13.082b in 2007, to sh13.701b in 2008.
“General business accounted for 89.4% of the business, while the firm got 10.6% of its premium income from life business.â€
Premium income and income from other sources increased the firm’s earnings by 35%, from sh11.283b in 2007 to sh15.26b in 2008.
In 2008, NIC’s underwriting result peaked at sh1.214b, which represents a massive 87.4% increase over the 2007 figure of sh684.8m.
Investments and other income followed a similar trend, rising by 77% from sh2.826b in 2007 to sh4.98b in 2008.
The total assets of the company grew by 38% to sh74.808b in 2008.
The increase resulted, in the main, from the valuation of investment properties which had gained 22.6% in value as well as the revaluation of NIC’s equity investment.
Consistent with its policy of regular dividend payment commencing from the first year of post-privatisation operations in 2006, the company approved dividends of sh8.1m in 2006, sh1.71b in 2007.
In 2008, the shareholders approved a dividend payout of sh2.01b, representing a payment of sh5 for every share.
The NIC offer presents the Ugandans with a golden opportunity to own shares in a firm with a long and glorious history of strong economic performance, experts said.
By Ibrahim Kasita
DESPITE the launch of the leading provider of insurance and risk management services firm’s initial public offer (IPO), doubts still remain on the role a Ugandan investors will play.
The National Insurance Corporation (NIC), the largest insurance company by assets and profitability, is offloading 40% of the Government’s stake to investors in a 26-day public offer that started last week.
IGI, a Nigerian insurance company, is the majority shareholder with 60% of NIC shares.
In an effort to promote part-ownership of public business entities by citizens, the Government is selling its 161,552,000 ordinary shares in NIC, representing 40% of the issued share capital of the company.
The NIC IPO follows a decision in June 2005 by the Government to sell its 60% shareholding in NIC to IGI.
The public offer has been set at a subsidised price of sh45 per share.
The minimum purchase is 2,000 shares worth sh90,000. This gives ordinary Ugandans an opportunity to participate in the divestiture of the firm.
In recognition of their contribution towards the growth of NIC over the years, 4% of the issued shares have been reserved for permanent employees of NIC at the IPO price.
NIC listing has been an on-and-off affair for the last three years, disrupted by the dispute over the Makerere Univeristy pension’s fund.
The insurance company was established as a state-owned entity in 1964.
Within three years of privatisaton, according to Elias Edu, the corporation secretary of NIC, the insurers’ premium income grew by over 100% from sh6.5b to sh13.7b in 2008.
“Within the same period, profits after tax grew from sh981m in 2005 to sh2.6b in 2008,†he said.
“Total assets grew from sh50.2b in 2005 to sh75b in 2008.†Edu also said investment income rose from sh1.9b in the last three years to sh3.7b in 2008. The firm has expanded its branches across the country with over 10 branches and area offices and over 24 outlets nationwide.
Despite the credit crisis and local operational challenges, Edu explained that NIC proved its resilience by recording a modest growth in gross premium income from sh13.082b in 2007, to sh13.701b in 2008.
“General business accounted for 89.4% of the business, while the firm got 10.6% of its premium income from life business.â€
Premium income and income from other sources increased the firm’s earnings by 35%, from sh11.283b in 2007 to sh15.26b in 2008.
In 2008, NIC’s underwriting result peaked at sh1.214b, which represents a massive 87.4% increase over the 2007 figure of sh684.8m.
Investments and other income followed a similar trend, rising by 77% from sh2.826b in 2007 to sh4.98b in 2008.
The total assets of the company grew by 38% to sh74.808b in 2008.
The increase resulted, in the main, from the valuation of investment properties which had gained 22.6% in value as well as the revaluation of NIC’s equity investment.
Consistent with its policy of regular dividend payment commencing from the first year of post-privatisation operations in 2006, the company approved dividends of sh8.1m in 2006, sh1.71b in 2007.
In 2008, the shareholders approved a dividend payout of sh2.01b, representing a payment of sh5 for every share.
The NIC offer presents the Ugandans with a golden opportunity to own shares in a firm with a long and glorious history of strong economic performance, experts said.