The insurance sub-sector of the Nigerian Stock Exchange is likely to witness increased activities in the next few months.

This, according to analysts, is on the back of ongoing restructuring in the sector which began last year, resulting in some mergers and acquisitions in the sector.

For instance, only last week, shareholders gave their approval to a merger between Custodian and Allied Insurance Plc and Crusader Nigeria Plc, with Custodian having a higher stake in the company.

The Chairman, Custodian and Allied Insurance, Chief Michael Ojo, had stated at the meeting that the merger would help to improve operating efficiency and expand product portfolio.

Analysts have said that as a result of these developments, which are aimed at strengthening the insurance industry, more investors are likely to be attracted to the sector.

Already, analysis from the Nigerian Stock Exchange shows that the sub-sector, which recorded a significant drop at the close of equity trading last year, is recording improved activities this year.

The NSE Insurance Index, which measures the performance of major insurance stocks, has gained 10.03 per cent this year alone, from 118.49 basis points recorded on the first trading day of this year to 126.21 per cent as at Friday.

This is similar to the gain recorded in the NSE’s All-Share Index which has gained 10.14 per cent this year.

Last year, while the NSE All-Share Index rose by 35 per cent from 20,730.63 basis points at the beginning of the year to 27,866.51 basis points at the end of the year, the Insurance Index recorded a significant decline of 17.35 per cent from 143.54 points at the beginning of the year, to 118.64 per cent in December.

The Group Managing Director, Meristem Securities Limited, Mr. Oluwole Abegunde, said that in the next few months, lots of investors would be attracted to the insurance sector.

He added that this was already visible from the figures churned out by the sub-sector in the last two weeks, which he noted, was on the verge of undoing the loss recorded last year.

 ÃƒÂ¢Ã¢â€šÂ¬Ã…“Analysis have shown that the insurance sub-sector is one that investors should watch out closely for, because there is going to be a lot of activity there in the coming months; there is going to be a significant shift in the insurance companies, and we are set to start seeing a significant re-entry into that sector,” he said.

An investment research analyst, Mr. Gary Watson said, “A lot of foreign investors have already began to ask questions and shown interest in the insurance stocks and that gives an impression that they seem to see what we aren’t seeing yet, and this is an indication that the sector would perform significantly this year.”

Source: Punch (written by Udeme Ekwere)