2014
Disclaimer
Chapel Hill Advisory Partners Limited (Chapel Hill) is the investment banking business of the Chapel Hill Denham Group.
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Contents
I.
II.
III.
CONTACTS
I.
CONTENTS
I.
Pre-Consolidation Era
1951 2004
2005 2009
2014: 59 Insurance
companies, top 4
controlling up to 30%
market share
2010 Date
I.
The Nigerian insurance industry (the industry) has evolved over the
past years, following increased capitalization requirements.
Non-Life
8%
3%
15%
AIICO
9%
10%
9%
5%
65%
67%
IGI
Mansard
Leadway
5%
Others
Note: Market share based on Gross Premiums as at December 2011 (NAICOMs latest data)
Source: NAICOM
50%
40%
30%
Life
4%
20%
10%
0%
2009
2010
2011
Growth in GDP
2012
2013
Growth in Premium
I.
2014
2015
Enforcement of Compulsory
Insurance Products
Employers liability
NAICOM to champion:
Enforcement of distribution
channels among insurers,
Introduction of Risk-based
Supervision
Compliance
Adoption of International
Financial Reporting Standards
(IFRS)
THE IMPLEMENTATION OF THESE POLICIES IS POISED TO YIELD SUBSTANTIAL GAINS FOR THE COUNTRY, INSURANCE INDUSTRY AND REGULATOR
I.
105.4
15%
157.2
20%
190.0
19%
200.4
233.8
277.1
343.2
428.9
515.3
21%
25%
25%
25%
23%
22%
81%
85%
80%
81%
79%
75%
75%
75%
77%
78%
2006A
2007A
2008A
2009A
2010A
2011A
2012E
2013E
2014E
2015E
Non-life premiums, %
Life premiums, %
0.8%
0.7%
3,000
0.6%
2,000
0.4%
0.2%
1,000
0.0%
2006A
I.
2008A
2010A
2012E
2014E
2006A
2008A
2010A
2012E
2014E
NAICOM increased regulatory capital for Life (N2billion), Non-Life (N3billion), Composite (N5billion) and Reinsurance
(N10billion) in 2005.
In December 2009, NAICOM initiated the Market Development and Restructuring Initiatives (MDRI) project, aimed at
instituting reforms in industry capacity in the Nigerian insurance market. A major thrust being the enforcement of:
Group Life Insurance
Employers Liability
Building under construction
Occupiers liability
Motor Vehicle Third Party Insurance
Health Care Professional Indemnity Insurance
The CBN issued new rules and regulations in 2010 in which Deposit Money Banks had to divest of their non-banking
subsidiaries or establish themselves as holding companies should they choose to continue with their non-banking business.
Compliance with the CBN directive led to Banks' diverstment of non bnnking subsdiaries, which presented merger and
acquisition opportunities as independent insurers sought to increase market share.
In March 2010, the Federal Government passed The Nigerian Content Oil & Gas Development Bill, which mandates the
utilization of Nigerian/local content in all Oil & Gas projects including insurance of all Oil and Gas related risks.
c.70% of oil and gas industry premium is ceded to overseas reinsurers due to low capacity to retain huge risks despite
recapitalisation in 2007.
NAICOM has formed a committee to address this weakness, which may result in additional capital injection by the players
in the oil and gas sub-market.
NAICOM is currently considering a risk-based capaitalisation for insurers, which may also lead to some form of capital raising
and or mergers/acquisitions.
I.
I.
10
Foreign Peers
Nigerian Companies
40.0
30.0
20.0
16.4x
9.6x
10.0
0.0
Nigerian Companies
20.0
15.0
11.2%
9.7%
10.0
5.0
0.0
Source: Bloomberg, Chapel Hill Denham Research and Companies Quarterly Reports. Market data as at February 7, 2014. All LTM Ratios based on 9M-2013 figures.
I.
11
23.5
20.2
AIICO
23.8
Wapic
13.2
Custodian
Custodian
13.2
AIICO
14.6
Continsure
12.8
Mansard
14.0
Mansard
12.1
Continsure
13.5
Mutual Benefit
9.2
Nem Insurance
9.1
Continsure
11.6
Afrinsure
10.3
AIICO
7.5
19.1
Intenegins
11.5
Custodian
22.2
Cornerstone
4.5
STDinsure
8.7
Sovrenins
9.1
Equity Assurance
4.4
Royalex
8.1
Royalex
8.4
STDinsure
4.2
Wapic
7.9
Nigerins
8.0
Nem Insurance
4.2
Nem Insurance
7.6
Staco
6.4
Oasis Insurance
4.0
Goldinsure
7.1
STDinsure
5.7
Mutual Benefit
4.0
Cornerstone
6.4
Cornerstone
5.0
Nigerins
3.9
Nigerins
5.7
Lasaco
4.9
Lasaco
3.7
Lasaco
5.6
Goldinsure
4.7
Sovrenins
3.4
Prestige
4.2
Intenegins
3.8
Royalex
3.2
Equity Assurance
3.9
Law Union
3.6
Staco
3.1
Law Union
3.8
Prestige
3.5
Goldinsure
2.4
Oasis Insurance
3.8
Wapic
3.3
Law Union
1.7
Mutual Benefit
3.6
Equity Assurance
3.0
Prestige
1.6
Sovrenins
3.1
Oasis Insurance
1.6
Staco
2.4
Afrinsure
1.4
Intenegins
* As at January 31, 2014
I.
Afrinsure
0.8
12
AfricInvest 19%
DEG 12%
Others 45%
Others 57%
Life 51%
Life 78%
Life 13%
Non-Life 49%
Non-Life 22%
Non-Life 87%
N7.83 Billion
N23.80 Billion
N13.53 Billion
EPS: 10.99k
EPS: 11.63k
EPS: 35.16k
NAV/share: N1.40
NAV/share: N1.38
NAV/share: N3.26
Market Capitalization
Key Financials
Source: Bloomberg, Chapel Hill Denham Research, Companies 9-month Audited Accounts. Market data as at February 7, 2014
I.
13
Business Divisions
AIICO Life
Engaged in the
provision of life
assurance, savings and
investment plans
AIICO Asset
Management
AIICO General
Specializes in insurance
products against
potential losses,
damages and liability
claims
Board Members
Name
Chief (Dr.) O. Fajemirokun
Mr. Edwin Igbiti
Mr. Jide Orimolade
Key Management
Title
Chairman
Managing Director/CEO
Title
Managing Director/CEO
Oladipo Oguntuga
Executive Director
Director
Director
Director
Director
Director
Director
Director
I.
Name
14
(USDmm)
Balance Sheet
Insurance Receivables
Total Assets
Claims Payable
Liability on Insurance contracts
Total Liabilities
Shareholders Equity
Income Statement
GWP
NPI
Claims
Operating Expenses
Net Income
Key Ratios
ROE (Annualised)
ROA
Claims Ratio
2012
2013 9 MONTHS
14.0
224.7
3.9
100.8
150.8
73.0
14.0
284.5
4.8
133.1
193.4
89.9
94.9
66.2
29.9
(14.5)
11.2
116.6
77.3
45.7
(17.9)
4.9
15.4%
5.0%
31.5%
7.3%
2.3%
39.1%
250%
Metric
Share Price as at February 7, 2014 (NGN)
52 Week High (NGN)
52 Week Low (NGN)
Shares Outstanding (M)
Market Capitalisation (NGNm)
Market Capitalisation (USDm)
2013 P/E
2013 P/B
200%
147%
145%
150%
100%
AIICO
Value
0.91
1.48
0.75
8,800.20
8,184.19
52.55
4.7x
0.6x
ASI
Shareholding Pattern
Bahamas
14%
Non-Life
49%
Life
51%
Fajemirokun
6%
Others
80%
2012 Balance Sheet numbers represent 9month figures, Income Statement numbers are for the full year. Exchange rate of N155.75:US$1
Source: Bloomberg, Chapel Hill Denham Research, Companies 9-month Audited Accounts. Market data as at February 7, 2014
1
I.
15
Business Divisions
100%
100%
Mansard
Investments
Limited
Mansard Health
Limited
Board Members
Name
Mr. Victor G. Osibodu
Key Management
Title
Chairman
Director
Director
Director
Director
Director
Director
Director
Director
I.
Name
Title
16
(USDmm)
Balance Sheet
Insurance Receivables
Total Assets
Claims Payable
Liability on Insurance contracts
Total Liabilities
Shareholders Equity
Income Statement
GWP
NPI
Claims
Operating Expenses
Net Income
Key Ratios
ROE
ROA
Claims Ratio
2012
2013 9 MONTHS
13.1
202.7
0.5
12.8
109.0
90.6
5.3
215.2
0.6
13.7
120.8
88.7
64.5
32.8
15.2
(20.1)
22.1
68.8
34.4
15.5
(16.4)
29.7
24.4%
10.9%
23.5%
33.5%
13.8%
22.6%
160%
Metric
Share Price as at February 7, 2014 (NGN)
52 Week High (NGN)
52 Week Low (NGN)
Shares Outstanding (M)
Market Capitalisation (NGNm)
Market Capitalisation (USDm)
2013 P/E
2013 P/B
135%
120%
100%
Shareholding Pattern
MANSARD
Others
Life
78%
2012 Balance Sheet and Income Statement numbers represent 9month figures. Exchange rate of N155.75:US$1
Source: Bloomberg, Chapel Hill Denham Research, Companies 9-month Audited Accounts. Market data as at February 7, 2014
I.
145%
140%
Non-Life
22%
Value
2.49
2.87
1.79
10,000
25,000
160.51
9.4x
1.8x
ASI
DPI
24%
AfrInvest
19%
DEG
12%
17
Business Divisions
Board Members
Name
Chief Michael Ade-Ojo
Mr. O. Oshin
Custodian &
Allied
Insurance
Limited
Custodian Life
Assurance
Limited
Custodian
Trustees
Limited
Key Management
Title
Chairman
Managing Director/Founder
Mr. R. Asabia
Director
Director
Director
Mr. I. Dikko
Director
Name
Title
Mr. O. Oshin
Managing Director/Founder
Mr. O. Odunsi
I.
Crusader
Sterling
Pensions
Limited
18
(USDmm)
Balance Sheet
Total Assets
Total Liabilities
Shareholders Equity
Income Statement
GWP
NPI
Claims
Operating Expenses
Net Income
Key Ratios
ROE (Annualised)
ROA
Claims Ratio
2012
2013 9 MONTHS
263.1
151.8
111.4
303.5
177.9
125.6
76.0
29.9
13.2
(7.3)
13.1
127.6
38.1
22.4
(14.2)
13.9
11.8%
5.0%
17.4%
14.7%
6.1%
17.5%
200%
Metric
Share Price as at February 7, 2014 (NGN)
52 Week High (NGN)
52 Week Low (NGN)
Shares Outstanding (M)
Market Capitalisation (NGNm)
Market Capitalisation (USDm)
2013 P/E
2013 P/B
Value
2.30
2.56
1.30
5,881.86
13,410.65
86.10
4.2x
0.7x
180%
177%
160%
140%
145%
120%
100%
CUSTODYINS
FY20122
ASI
Shareholding Pattern
Chief Ade
Ojo
20%
Life
13%
Mr. Oshin
16%
Others
Non-Life
87%
Aureos
7%
2012 Balance Sheet numbers represent 9month figures, Income Statement numbers are for FY 2012 (for Custodian prior to acquisition of Crusader). Exchange rate of N155.75:US$1
2012 Business Mix is Proforma for Crusader Acquisition
Source: Bloomberg, Chapel Hill Denham Research, Companies 9-month Audited Accounts. Market data as at February 7, 2014
1
2
I.
19
The Chapel Hill Denham Group (Chapel Hill Denham) is a privately held independent investment banking, investment
management, securities trading and principal investments firm.
Chapel Hill was formed in April 2005, commenced business in July 2005 and is licensed by the Securities &
Exchange Commission ("SEC") as an Issuing House and Market Maker.
Chapel Hill Denham emerged from the business combination of the successful practices of Chapel Hill Advisory Partners
Limited and Denham Management Limited in February 2008.
Our firm is focused on providing independent, unbiased advisory and investment services to entities and individuals involved
in investing in and developing Africa's productive infrastructure.
The Chapel Hill Denham Group also offers investment management and securities trading through two subsidiaries - Chapel
Hill Denham Management Limited and Chapel Hill Denham Securities Limited.
Chapel Hill Advisory Partners Limited is registered with the Nigerian Securities and Exchange Commission (SEC) as an
Issuing House.
Chapel Hill Denham Management Limited is the first firm to be awarded a market making license by the Nigerian SEC.
The Chapel Hill Denham Group expanded operations into Ghana in 2012 to form Chapel Hill Denham Securities (Ghana)
Limited, carrying out Financial Advisory, Securities Trading and Principal Investment activities.
II.
21
INVESTMENT BANKING
SECURITIES TRADING
ASSET MANAGEMENT
SHARED SERVICES
RISK MANAGEMENT/ LEGAL AND
COMPLIANCE
II.
CORPORATE SERVICES
22
INVESTMENT BANKING
SECURITIES TRADING
Trading and Brokerage
II.
back, Restructuring
Mergers & Acquisitions Advisory:
Divestitures, Buy outs
Equity Capital Market: Initial
Public Offerings, New Listings
Debt Capital Markets: Corporate
and Municipal Bond Issuance
Project Finance: Structured
Finance
Privatisation
Research
ASSET MANAGEMENT
Institutional Investments
Mutual Fund Management
Private Wealth Services
23
First Advisory firm to raise capital via a Book Building Process in the Nigerian capital markets.
First Advisory firm to complete a reverse stock split in the Nigerian capital markets.
First Advisory firm to launch a Share buy-back in the Nigerian capital markets.
Financial Adviser to 4 of the 5 CBN Intervened banks that completed M&A transactions.
Financial Adviser to 6 of the 13 banking mergers during the first banking sector consolidation in Nigerian Banking history
(2005).
Consistently out-sold all other Issuing Houses and/or Bookrunners in over 90% of capital raising transactions the firm has
completed, over the past 5 years.
Sound transaction strategy, operational experience coupled with substantial institutional resources.
Commitment to being the financial advisory and investment management business partner of choice for first order names
and clients.
II.
24
III. Contacts
Contacts
Chapel Hill Advisory Partners Limited
1st Floor, 45 Saka Tinubu Street
P.O. Box 74520
Victoria Island
Lagos
Telephone: +234 1 279 9563/4 | +234 1 461 0691/2
Fax:
+234 1 279 9562 | +234 1 461 0693
Email:
info@chapelhilldenham.com
Website:
www.chapelhilldenham.com
III. CONTACTS
26