Abstract

Ade Ibiwoye and I. A. Adeleke

For many years only few of the insurance companies in Nigeria were quoted on the Nigerian Stock Exchange (NSE). Those that did were regarded as penny stocks and were not well patronized. Majority prefer to be outside the exchange where the duty of information disclosure is less stringent. However, in 2005 the regulatory authority raised the capital requirement by more than 1000 multiples of the previous level. Unlike the previous recapitalizations when insurance companies had always found a way to meet the recapitalization exercise without actually recapitalizing, the 2005 exercise forced a lot of the companies to either go to the stock exchange or else merge with those that did. Since then, investors’ interest in insurance stocks seems to have been kindled. Using daily listing on the NSE to compare the pre-consolidation performance of Nigeria insurance companies with their post consolidation performance, the study shows that there is a stable and upward movement in price of insurance stock.