The board of Cornerstone Insurance Plc, which has not paid shareholders dividend for five years, jerked up the firm’s spending on directors by as much as 1,266 per cent in 2020, a year in which profit dwindled by N2.513 billion or 61.4 per cent as Nigeria’s insurance industry took a battering from the coronavirus pandemic.
The Lagos-based insurer splurged an amount equivalent to 58.4 per cent or more than half of its entire profit for last year on its eight directors without paying owners of the company dividend, which they last received in 2015 when they got N0.02 per share.
PREMIUM TIMES examined data published in Cornerstone Insurance’s unaudited financial statement for 2020 and found that directors’ cost ballooned to N932.369 million from N68.254 million a year earlier. This was solely responsible for a rise in Other Operating Expenses from N1.408 billion to N2.043 billion.
Ironically, this happened at a time when a number of insurance firms slashed directors pay to boost profit.
For instance, rival AXA Mansard cut directors’ emolument and expenses from N68.770 million to N53.322 million despite recording a 48 per cent profit jump, while Sovereign Trust Insurance pared-down board expenses by 19 per cent even when profit grew by almost half.
Also, Veritas Kapital Assurance, whose profit expanded by 279 per cent during the year, still cut directors’ allowances and expenses from N210.059 million to N178.600 million.
Cornerstone Insurance profit tumbled to N1.597 billion from N4.109 billion even when Gross Premium Written advanced 35 per cent to N17.596 billion as surges in Changes in Unearned Premium, Changes in Life Fund, and Gross Claims Incurred eroded earnings.
The N932.369 million directors’ expenses of Cornerstone Insurance were way higher than those of some of the biggest companies in Nigeria by market value at a time when a number of such firms even decided to reduce the value of that expenditure category.
BUA Cement, the fourth most capitalised company on the Nigerian Stock Exchange, scaled down directors’ expenses for the year from N220.969 million to N209.592 million just as Guaranty Trust Bank, the country’s biggest bank by public value, trimmed its from N787.091 million to N700.641 million.
In the same vein, United Bank for Africa cut directors’ remuneration to N782 million from N888 million, while food processing company Nestle fixed directors’ emolument at N355.901 million for the year.
Cornerstone Insurance shares were quoted at N0.55 per unit in Lagos at 12:30 West African Time in Lagos on Tuesday, recording no movement.
WATCH: Governor Yahaya Bello's Roadmap to Hope 2023