Following the capital market crash that occurred in the country in 2008, most underwriters who had invested heavily in equities are now full of regrets, while the share value of insurance stocks, alongside other listed equities witnessed a sharp price drop.
As a result, many underwriters incurred heavy losses and were therefore forced to make huge provisions for doubtful investment, and leaving them with negative reserves.
While most of the underwriters are making profits on a yearly basis, many devoted these profits to offsetting the negative reserve, and until they paid off the debts, shareholders might have to wait longer to get good returns on their investments in the Insurance sector.
Shareholders at various yearly general meetings, had lambasted underwriters for failing to give them dividend or bonus, especially as some companies had not done so for almost five years.
Confirming the development, in an exclusive chat with The Guardian, Director, Finance and Account, NAICOM, Nicholas Opara, defended that the companies are not allowed to pay dividend until they cleared their negative reserves.
“The Commission will always ask them to extinguish the negative reserves before they pay dividend. Hopefully, most of them are making profit and if it continues, they should be able to declare dividend in the near future,” he pointed out.
But shareholders are unhappy with this development, as insurance companies are still offsetting previous debts, leaving little or nothing for them to take home.