|Eminent Members of the Board of Directors, Distinguished Shareholders, Valued Customers and Friends of IGI, Ladies and Gentlemen I sincerely welcome you all to the 18th Annual General Meeting of your Company and have the pleasure of presenting to you the company‚ ôs Annual Report and Financial Statements for the year ended December 31, 2009.
Before I proceed to unveil the details of your company‚ ôs performance in 2009, permit me to present an overview of the operating environment during the period under review. The objective is to enable us fully appreciate the opportunities and challenges that your company faced during the period.
In 2009, industries faced critical challenges as a result of the global economic meltdown which caused a drastic drop in the prices of stock of most blue-chip companies. There were huge non-traditional interventions by monetary authorities worldwide to reverse the negative impact of the global meltdown.
Overall, the global economy experienced a projected decline of 0.8 percent compared to an overall growth of 3 percent in 2008.
Nevertheless, the Nigerian economy demonstrated a resilience that defied most predictions at the onset of the recession in the preceding year. According to the Central Bank of Nigeria (CBN), the economy recorded a Gross Domestic Product (GDP) growth of 6.7 per cent in 2009 up from the 6.0 per cent growth rate achieved in 2008. The Bank attributed the boost in GDP to a robust performance by the non-oil sector particularly the telecommunications sector; the success of the peace initiative in the Niger Delta region during the second half of the year as well as the improvement in oil price and output.
The CBN, in August 2009, injected over N600 billion to strengthen the banking industry to avert systemic collapse of the financial sector. The corrective measures also included management changes in some banks where perceived failure in corporate governance were considered grave. The CBN intervention resulted in job losses as well as cost savings and cutback in lending activities.
In February 2009, the CBN re-introduced the Retail Dutch Auction System (RDAS) with the objective of achieving some stability in the foreign exchange market. The return of the RDAS led to the partial suspension of trading in the inter-bank market in the wake of the official directive to oil companies and government agencies to sell foreign exchange to the CBN only. However, as demand eased in the second quarter of the year, the CBN abolished the RDAS and introduced the Wholesale Dutch Auction System (WDAS) as the foreign exchange management mechanism for the rest of the year.
According to the CBN, the Naira depreciated in all segments of the exchange market to close at N149.58 to the US Dollar, representing a depreciation of 11.4 percent from the year-end rate in 2008. Nigeria‚ ôs foreign exchange reserves also decreased by 20 percent, from $53billion in December 2008 to $42.4billion in December 2009.
THE INSURANCE INDUSTRY
The cut in consumer spending as a result of general apathy to lending by the banks had severe effects on insurance, which became a dispensable item on the priority list of the consumer. The near-collapse of the equities market and the resultant reduction in stock prices continued to put pressure on the capital of insurance companies. The National Insurance Commission (NAICOM), in its bid to enhance insurance penetration, released fresh guidelines for the enforcement of compulsory insurance. ‚ úThe Nigerian Insurance Market Development and Restructuring Initiative‚ Ě (MDRI), introduced by the regulatory agency, is expected to boost industry revenue by reducing the very high level of non-compliance with laws and regulations on compulsory insurance.
Your company achieved N9.394billion in Gross Premium in 2009 from N8.428billion in 2008, representing an increase of 11% or N966 million. Arising from the increase in Gross premium income, Outward Reinsurance Cession also rose by 12% from N2.355 billion in 2008 to N2.631billion in 2009.
The company recorded a 28% decrease in Acquisition Costs from N1.3 billion in 2008 to N875 million in 2009 as a result of increase in premium generated from direct business. This had a positive impact on the finance of the company as there was reduction in the total amount paid as commission to agents and brokers.
Investment and other income decreased by 48% to N1.08 billion in 2009 from N2.07 billion recorded in 2008, due in part to the reduction in investment income under Life business occasioned by low interest rate on placement with banks.
The Company made a loss of N2.72 billion during the year under review as against a loss of N567 million recorded in 2008. This made our Shareholders Fund to decline from N28.82 billion in 2008 to N25.99 billion in 2009. However, our total assets remained stable at N37.895 billion from N37.368 billion in 2008.
The company and ten of its subsidiaries were consolidated in these financial statements in accordance with Statement of Accounting Standards No 27 (On Consolidated and Separate Financial Statements) issued by the Nigerian Accounting Standards Board (NASB), which became operational as from 1 January 2008.
The subsidiaries consolidated with the Company in these financial statements are National Insurance Corporation Limited, Uganda; Industrial and General Insurance Co.
(Ghana) Limited; IGI Life Assurance Ghana Limited, Ghana; Monarch Communications Limited; Global Trust Savings and Loans Limited; IGI Gamstar Insurance Company Limited, The Gambia; Global Trust Bank (Uganda) Limited, Uganda; All Crown Registrars Limited; IGI Pension Fund Managers Limited and International Health Management Services Limited. Gross Premium Income for the Group in 2009 was N11.701 billion as against N9.515 billion recorded in 2008 with IGI Plc accounting for 80% of the income. Investment Properties stood at N14.8 billion from N13.8 billion recorded in 2008 representing an increase of 7% while Shareholders‚ ô Fund decreased by 12% to N27 billion from N30.53 billion recorded in 2008.
The Group made a loss of N2.98billion after exceptional item of N1.021billion as against a profit of N481.68 million recorded in 2008, as three subsidiaries recorded losses as follows: Global Trust Bank Uganda (N1.524billion); Monarch Communications (N1.528billion) and IGI PFM (N95million). The losses recorded by Global Trust Bank and IGI Pension Fund Managers were not unexpected since they constituted start-up costs that had to be written off in the first year of operations of the companies in line with international accounting standards.
Distinguished Ladies and Gentlemen, in spite of the daunting challenges in the operating environment, your company has retained its position as the leading insurance company in the economy and Nigeria‚ ôs foremost insurance ambassador on the continent. The growth in the size of our operations and the initiatives introduced in 2009 will serve as a platform to propel IGI to greater heights in service excellence and profitability both at home and abroad.
The future is indeed bright as we are well positioned to take full advantage of the various macro-economic policies designed to increase insurance penetration and to discourage capital flight. Indeed, the Board and Management will continue to pursue strategies and policies that will help your company to maintain its preeminence in the industry locally and internationally.
With a view to positive future prospects for your company, IGI, what remains for me is to express sincere gratitude to all our esteemed local and international clients, brokers, agents and field officers for their invaluable support and patronage. We count on your continued support and we promise to continue to provide you IGI‚ ôs quality service.
My deep and sincere gratitude goes to you, our distinguished shareholders and Members of the Board of Directors as well as the management and staff of IGI Plc whose joint efforts ensured the survival and growth of your company in the difficult financial year 2009. I sincerely thank you all and pray God to bless and prosper you and our dear company, Industrial And General Insurance Plc. Amen
General Dr. Yakubu Gowon, GCFR, Ph.D, psc, jssc.