NEM Spikes 45% as Insurer's Strong Float Attracts Buyers

NEM Insurance Plc gained weight as the company’s market valuation jumped by more than 45% despite seesaw performance on the Nigerian Exchange. Stockbrokers queued to fulfil NEM shares buying orders initiated by investors.

Its large float provides solid liquidity for stock traders to buy and sell without hassles. In its regulatory filing, the company declared 44.46% free float valued at N12.41 billion as of Dec 2023 in compliance with Nigeria’s Exchange free float requirement for companies listed on its main board.

After the strong rally, the insurance company is now worth more than N48 billion after its share price rose to N9.65 at the end of the trading session on Friday, from N6.65 at the beginning of the week. In its financial year 2023 result, the insurer company’s profit after tax rose by more than 252% to N18.501 billion from N5.252 billion in the comparable year in 2022.

The increased net profit came following a better performance at the top line. This was reinforced by gains from FX asset revaluation of N10.775 billion, up from N297 million after the mid-year 2023 naira devaluation.

According to information from its financial report, NEM Insurance’s gross written premium of N62.948 billion represented a notable increase of approximately 87% year over year when compared to the company’s gross revenue of N33.369 billion in 2022.

In late 2021, the insurance company completed its share capital reconstruction programme and officially resumed trading on the local bourse after re-listing. Consequent to the completion of the share reconstruction exercise, NEM Insurance’s entire issued share capital of 10,032,955,535 ordinary shares of 50 Kobo each at N2.42 per share was delisted from NGX’s Daily Official List.

The company’s 5,016,477,767 ordinary shares of N1.00 each, arising from the share capital reconstruction, were listed on NGX’s Daily Official List on December 29, 2021. The shares were valued at N4.84 per share.

After shares reconstruction in 2021, NEM Insurance Plc reduced shares from 10,032,955,535 ordinary shares of 50 Kobo each to 5,016,477,767 ordinary shares of N1.00 each.

NEM Insurance is expecting its profit to settle at N8.288 billion at the end of the first half of the financial year 2024. The financial services company stated that its revenue from insurance services is expected to reach N39.96 billion at the end of June 2024. The management forecast insurance service expenses to come in at N24.62 billion, in addition to net expenses on reinsurance contracts estimated to print at more than N2.8 billion in the same period.

NEM expects insurance service results for the period to settle at N12.537 billion in its first six months of operations in the financial year 2024. In addition to the N128 million gain from FX revaluation, interest revenue is projected to reach N1.425 billion as part of its operating income. The insurer also expects $14 million in gains from asset disposal.

Its other income line is expected to contribute more than N50 million to the company’s bottom line at the end of June.  NEM Insurance forecasted that its other operating expenses would total about N4.8 billion in the period.

The insurer expected finance costs to be above N94 million, and allowances for credit losses are projected to settle at N82 million. The total assets of the insurance company is projected to be about N73.5 billion. NEM Insurance expects its total equities to settle at N48.5 billion. NEM Spikes 45% as Insurer’s Strong Float Attracts Buyers

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