‘Policy Harmonisation Needed to Stabilise Market’
As the equities market continues to slide, a stockbroker, Mr. Rotimi Fakayejo, has said that harmonisation of policies among regulators in the financial sector was needed as a long-term solution to achieve stability.
After gaining N8 trillion in 2020 and N1.1 trillion in January 2021, the stock market has suffered persistent decline since February. The sudden bearish trend despite impressive dividends declaration by some companies, has been attributed to profit-taking and uptick in yields in money market instruments. For instance, in December 90-day, 180-day, 360-day Open Market Operations (OMO) bills were at 0.3 per cent, 0.5 per cent and 1.03 per cent respectively. However, these rates have jumped to 7.5 per cent, 8.5 per cent and 10 per cent in that order in February, a development that is attracting investors back to the fixed income market and partly contributing to the bearish equities market.
Speaking on the development, Fakayejo said if there was harmonisation of policies among the regulators, sudden change in market directions and instability would not happen. The stockbroker therefore called for harmonisation of policies.
He explained that foreign portfolio investors, who played a major role in the past by stabilising the market, would not return soon following the instability of the exchange rate.
“There is no portfolio investor who will bring in dollar at the present rate and since they usually play short-term and in the next one year exchange the dollar for about N500. They won’t want to do that. So if you see a situation the exchange is stable, then we can see an influx of foreign investors. But as much that(stable exchange rate) is not in place, we going to see them stay back and even not considering this economy at all for now,” he Fakayejo said.
Speaking on the rise in the yield environment, the Chief Executive Officer (CEO) of Blackstone Capital Limited, Dr. Lizzie Kings-Wali, said: “Whilst the rising inflationary pressure may not shift Central Bank of Nigeria’s (CBN) appetite for a low rate environment, aimed at stimulating credit to the
private sector and mobilising capital formation at reasonable cost, the perennial challenge of weakening naira is a major domino variable that often compromise the stance of the CBN and broader Monetary Policy Committee (MPC) in transiting Nigeria to a sustainably low rate environment.”
According to her, the CBN may be stuck between a rock and a hard surface, advising that the naira should be allowed to depreciate naturally and find an equilibrium in a guided liberal market, whilst the CBN pursue a sustainably low interest rate to reduce the cost of capital.
“Notwithstanding the inflationary implications of this position, maintaining a low cost of capital for all economic units - government, businesses, and household, is sine qua non for inclusive and sustainable growth of the Nigerian economy,” Kings-Wali said.
Sovereign Trust Insurance (STI) Plc said it has in the past five years paid a total of N13.3 billion to its policyholders.
The company, in a statement said the claims were paid out between 2016 and 2020, adding that the payments underscored its strong financial ability and undeterred commitment to guarantee peace of mind to all its customers as they go about their businesses without fear on a daily basis.
The company, defined claim as a reimbursement from the insurance company when the insured has suffered a loss that is covered under an insurance, insisting that it paid a total of N13.3billion in the past five years.
Giving the breakdown of the payment, Managing Director Sovereign Trust Insurance, Olaotan Soyinka, said the breakdown of the claims showed that energy insurance ranked number one with N4.2 billion, while fire insurance came in second with N3.1 billion. In addition, motor insurance ranked third with N3.036 billion as general accident came fourth with N1.3 billion.
Also, marine was fifth on the table with N1.2 billion while construction all risk insurance (CAR & Engineering) was the sixth. Commenting on the company’s claims history, Soyinka said: “It is in the policy of the company to pay all genuine claims promptly. Claims payment is one of the paramount reasons for our being in business.” “We take claims payment as a priority in our company and that is why we have remained trusted by our clientele and our broker partners who have continued to do business with us over the past years.”
He said insurance is about building trust and confidence, “and that is why customers who benefit from STI service go ahead to recommend it to other customers without our knowledge.”
He added that the company has built capacity to continually meet customers’ obligations in terms of offering quality products and settling all genuine claims promptly to the satisfaction of customers.
Soyinka said to achieve excellence in customer service, “the company has invested heavily in technology that ensures customers from any part of the world are able to file their claims, track the processing and get paid without a one- on-one encounter with STI staff.” According to him, this applies to all lines of the business, except for those that requires loss adjusters’ involvement and in some other occasions where the claims process gets complicated for some extenuating reasons.
Commenting also on the intent of the organisation as regards claims settlement, Executive Director, Technical Operations Jude Modilim, said, “the company is committed to settling genuine claims and there is no compromise to that as long as the “Ts” and the “Is” have been properly checked and certified. Genuine claims settlement in Sovereign Trust Insurance Plc is a major focus of our operations and we do not pay lip service to it.