Insurance in Nigeria.
Following hard on the heels of Nigeria's banking reforms, came the equally thorough reform of the insurance industry. The country's 104 insurance companies, many undercapitalised undercapitalised adj → descapitalizado , were given until 28 February this year to raise their capitalisation thresholds by factors of over 1,000%. This led to a spate of mergers and acquisitions but when the dust had settled, 71 stronger companies emerged.
Potentially Nigeria has the biggest insurance market in Africa but weaknesses in the industry meant that most of the large insurance business was underwritten by foreign companies. Now the domestic industry is poised not only to penetrate deeper in the domestic market but to expand to other regions of the continent.
To mark this historic transformation in Nigeria's finance sector, African Business is publishing two Special Reports on the country's insurance industry. This is the first Special Report; the second will appear in the May issue.
Big is beautiful
INSURANCE COMPANIES IN NIGERIA proved to be their 'brothers' keepers' during the financial sector's re-capitalisation with no outright casualty emerging from the exercise. However, there is still a long way to travel for the long-dreamed of emergence of mega players in Africa's biggest insurance market.
Things are looking up at last for Nigeria's insurance industry. Renowned for its under-performance and low capacity, the industry came out of an 18-month recapitalisation phase on 28 February this year appearing trimmer trimmer
see resco nail trimmer, toenail scissors. and raring rar·ing also rar·in'
Full of eagerness; enthusiastic.
[Present participle of dialectal rare, to rear, variant of rear2. to shake off decades of institutionalised Adj. 1. institutionalised - officially placed in or committed to a specialized institution; "had hopes of rehabilitating the institutionalized juvenile delinquents"
2. lethargy lethargy /leth·ar·gy/ (leth´ar-je)
1. a lowered level of consciousness, with drowsiness, listlessness, and apathy.
2. a condition of indifference.
Industry capitalisation exceeded N200bn ($1.62bn) from a pre-consolidation level of N30bn ($243m). Transformed overnight by its strengthened financial capacity, Nigeria's insurance companies are set to become dominant players in the African market where South African companies This is a list of companies in South Africa. Accounting
Emmanuel Chukwulozie, chief executive of the National Insurance Commission (Naicom), which regulates insurance business in Africa's most populous pop·u·lous
Containing many people or inhabitants; having a large population.
[Middle English, from Latin popul country, grinned broadly as he handed out fresh certificates to the last batch of the 71 firms which achieved the recapitalisation requirements set by government in September 2005.
Chukwulozie's decision to adopt a piecemeal piecemeal
patchy, e.g. necrosis of the liver in which groups of hepatocytes are separated by small groups of inflammatory cells and fine, fibrous septa following extension of the inflammatory process beyond the limiting plate. announcement of the successful companies--contrary to earlier repeated assurances that results would only be known after the 28 February deadline--had threatened to mar the conclusion of the first official capital level increase. This capitalisation directive was the first ever imposed in the industry's history with any semblance of regulator enforcement.
Yet company officials who arrived at Naicom's headquarters in Abuja just hours before the expiry of the deadline were only too happy to be recertified and adjudged fit and qualified to continue in business in an industry with huge untapped potential and opportunities.
The 71 companies that had increased their capital to the required level comprised 43 non-life underwriting Underwriting
1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt).
2. The process of issuing insurance policies. firms, 26 life insurers and two reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. companies. In reality, only 51 players are left on the Nigerian insurance landscape post-consolidation, until, that is, the inevitable arrival of fresh entrants (see box).
Twenty of the primary insurance companies had both General Business and Life portfolios which Naicom had recertified as distinct corporate entities in line with a requirement of the reform programme.
Prior to the commencement of the industry's consolidation programme, there were 104 registered insurance and four reinsurance companies. And, going by the make-up of the 71 survivors, Chukwulozie had achieved a zero-liquidation consolidation exercise. He had stated shortly after the announcement of the consolidation that he would not be an undertaker for the industry.
Savouring the euphoria An interpreted programming language developed in 1993 by Robert Craig at Rapid Deployment Software that is noted for its execution speed, flexibility and simplicity. It can simulate any programming method including object-oriented constructs. of this historic moment, Chukwulozie said the insurance stakeholders Stakeholders
All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. "are now at the threshold At the Threshold, whose son Lil E. Tee won the 1992 Kentucky Derby for W. Cal Partee, died March 23 of a stroke at Purdue University School of Veterinary Medicine in West Lafayette, Ind. The 21-year-old stallion stood at Wayne Houston's Stoney Creek Horse Farm near Mooreland, Ind. of the new era where industry will be able to meet the dreams and aspirations of the Federal Government for the insurance sub-sector in Nigeria". Claiming his Commission had been transparent, firm and fair throughout the process he nevertheless cautioned that the list of successful companies was 'provisional'.
Sounding like a fellow-traveller of the Federal Government's beleaguered be·lea·guer
tr.v. be·lea·guered, be·lea·guer·ing, be·lea·guers
1. To harass; beset: We are beleaguered by problems.
2. To surround with troops; besiege. anti-corruption crusade, the Naicom chief said he would withdraw the reissued licence of any company found to have falsified figures or made dishonest claims.
Naicom expected that "all sources of funds for the exercise complied with the Federal Government's anti-money laundering Anti-money laundering ("AML") is a term mainly used in the financial and legal industries to describe the legal controls that require financial institutions and other regulated entities to prevent or report money laundering activities. legislation and its due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. guidelines. Our teams of inspectors and verifiers are still working on all submissions and any infractions of the law will be dealt with accordingly".
Chukwulozie's threat of licence withdrawals in the face of established infractions has not dampened the upbeat mood of the industry. The word 'mega' is on every lip as operators confidently assert that the longed-for era of mega insurance companies had come at last and that the industry is set to raise its dismal performance record as a net contributor to the GDP GDP (guanosine diphosphate): see guanine. .
The reform programme itself was initiated in September 2005 by former Finance Minister Ngozi Okonjo-Iweala Ngozi Okonjo-Iweala (born June 13, 1954) is the former Finance Minister and Foreign Minister of Nigeria, notable for being the first woman to hold either of those positions. as part of President Obasanjo's government's wide-ranging reform of the financial sector of the economy.
The powerful banking industry was undergoing a long overdue reform programme under the Central Bank of Nigeria's governor Charles Soludo and the Finance Ministry. It was only a question of when, not if, the reform process would tackle the insurance sector, the banks' poor relation in the financial sector.
The insurance sector's consolidation process was considered inevitable by the industry, but many were astounded a·stound
tr.v. a·stound·ed, a·stound·ing, a·stounds
To astonish and bewilder. See Synonyms at surprise.
[From Middle English astoned, past participle of astonen, by the size of the recapitalisation pill they were expected to swallow.
Varying degrees of minimum capital level increases were prescribed for the three categories of business. For Life Business the minimum capitalisation was raised by 1,233% from N150m ($1.2m) to N2bn ($16.2m), while General Business operators were required to jack up their capital from N200m ($1.62) to N3bn ($24.3m).
The country's four re-insurance companies were required to make greater capitalisation increases than the combined increases for Life and General businesses. They were required to raise N10bn ($81m) to be re-certified--an increase of 2,757% from the previous level of N350m ($2.83m).
The banking sector's consolidation had required 1,110% minimum re-capitalisation but each bank was required to capitalise to at least N25bn ($202m), five times the capital level of insurance companies with licences for General and Life businesses.
Whilst the industry accepted the rationale for the consolidation, many insurers were not only concerned at the magnitude of the capitalisation increases, they felt that the timing was unfair to the sector as it came during the final period of the banking sector's consolidation reform and thus after the capital markets had been repeatedly drawn upon by the banks.
They feared market fatigue compounded by the grim reality of investor apathy apathy /ap·a·thy/ (ap´ah-the) lack of feeling or emotion; indifference.apathet´ic
Lack of interest, concern, or emotion; indifference. for insurance stocks and the huge cost of taking capital levels to what some operators regarded as stratospheric strat·o·spher·ic
1. Of, relating to, or characteristic of the stratosphere.
2. Extremely or unreasonably high: "money borrowed at today's stratospheric rates of interest" heights. They believed that government had sounded the death knell death knell
something that heralds death or destruction
Noun 1. death knell - an omen of death or destruction for many insurance companies.
Some leading industry players like Industrial And General Insurance Company Ltd (IGI IGI International Genealogical Index
IGI International Gemological Institute
IGI I'm Going In
IGI I Get It
IGI Institute of Geologists of Ireland
IGI Inspector General for Investigations
IGI Institution Gang Investigator (prisons) ), Nicon Insurance plc and Leadway Assurance Ltd appeared unperturbed by the capital increases.
IGI, the leading private insurer in Nigeria for the past decade and an international player (for example, it owns 60% of the National Insurance Corporation of Uganda), was already looking beyond the N5bn ($40.5m) minimum capital for composite operators--a level which IGI had attained as far back as December 2004.
The industry's umbrella trade group, the Nigerian Insurers Association (NIA NIA National Institute on Aging (NIH)
NIA National Indoor Arena (UK)
NIA National Intelligence Agency (South Africa and Thailand)
NIA National Institute of Accountants ) moved quickly to advise its members on what the recapitalisation exercise required. It organised a two-day Insurance Directors and Investors Workshop on Capitalisation some weeks after the consolidation agenda was unveiled. Carefully selected professionals and stakeholders were invited to present papers on topics covering a whole spectrum of issues involved in consolidation. They included Options and Prospects for Recapitalising the Industry, and Critical Success Factors for Profitable Management of Insurance Institutions, among other themes.
Welcoming participants to the forum, the then NIA president and managing director, Leadway Assurance's Oye Hassan-Odukale said the NIA was determined to "prepare and thoroughly educate our members on the critical issues involved in the consolidation and to sensitise Verb 1. sensitise - cause to sense; make sensitive; "She sensitized me with respect to gender differences in this traditional male-dominated society"; "My tongue became sensitized to good wine"
sensitize prospective and existing investors of investment opportunities in the insurance industry and the need to increase investment level in the industry". The finance minister also sent the industry a message of encouragement, but made it clear there was no going back on the measures.
In the weeks following the workshop, the industry took tentative steps towards signing several memoranda of understanding (MOUs), as small players jostled for would-be merger partners whilst the likes of IGI, Nicon and Leadway Assurance waited in the wings for acquisition pickings. A number of the MOUs were aborted a·bort
v. a·bort·ed, a·bort·ing, a·borts
1. To give birth prematurely or before term; miscarry.
2. To cease growth before full development or maturation.
3. as corporate alliances were dissolved because of critical merger issues.
Royal Exchange Assurance, the oldest player in the market, teamed up with Phoenix of Nigeria Assurance and African Prudential Insurance. IGI merged with its subsidiary Postal Life and General Insurance Company and also acquired Nasal Insurance Company (formerly the insurance arm of the Dangote Group, the manufacturing and trading conglomerate).
Nicon, formerly government-owned and a market leader for many years, bought out the non-Life business of UBA UBA Universidad de Buenos Aires (Argentina)
UBA Umweltbundesamt (German: Federal Environment Agency)
UBA Urstadt Biddle Properties Inc
UBA Urstadt Biddle Properties Inc. Insurance, owned by the giant United Bank for Africa group. Sovereign Trust Insurance plc consolidated a merger with three companies (Confidence Insurance plc, Coral International Insurance Company Ltd and Prime Trust Insurance Co Ltd), bought two companies (ACEN ACEN Anglican Communion Environmental Network
ACEN Assembly of Captive European Nations Insurance plc and Guardian Trust Insurance Ltd) and then sold off Guardian Trust Insurance to PHB Bank--the latest entrant en·trant
One that enters, especially one that enters a competition.
[French, from present participle of entrer, to enter, from Old French; see enter. from the banking sector--on the eve of the recapitalisation deadline.
Leadway Assurance, AIICO AIICO American International Insurance Company Insurance, Niger Insurance, Cornerstone Insurance plc, Crusader Insurance, Goldlink Insurance, Prestige Assurance, Law Union and Rock Insurance, and the bank-owned Guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. Trust Assurance (GT Bank), Zenith General Insurance (Zenith Bank), WAPIC Insurance (Intercontinental Bank), Heirs Life Assurance (UBA Group and South African partners) and Union Assurance Co Ltd (Union Bank) easily also made the list (see table).
It is early days yet, but some critics are already bickering bick·er
intr.v. bick·ered, bick·er·ing, bick·ers
1. To engage in a petty, bad-tempered quarrel; squabble. See Synonyms at argue.
2. about the size of the market. Many had expected the market to shrink to about 20 mega companies--just as Charles Soludu's banking sector consolidation exercise had cut down the industry size from 85 to 25 banks.
The insurance industry may be further trimmed during the second wave of consolidation which, going by recent statements from leading operators like IGI and Leadway and Crusader, may have started already.
OBJECTIVES OF THE INSURANCE SECTOR REFORMS
* To increase the industry's low retention capacity, which had stunted its growth. Government was especially concerned about low local underwriting capacity for big ticket risks in the oil and gas, aviation, marine and other special risk sectors and was determined to dam the huge foreign exchange outflow engendered by the situation
* To attract foreign capital infusion Capital infusion
Often refers to the cross-subsidization of divisions within a firm. When one division is not doing well, it might benefit from an infusion of new funds from the more successful divisions. into the industry for enhanced premium growth and profitability
* Achieving a consolidation that will produce companies capable of meeting claims obligations and compete at the continental and global levels
* To enable operators to attract the wherewithal where·with·al
The necessary means, especially financial means: didn't have the wherewithal to survive an economic downturn.
Wherewith. for strategic investments in human capital development--ie, to attract, train and retain professionals able to utilise new technologies for greater efficiencies
* Creating a competitive environment which leads to brand activities, increased investment and better public awareness of the benefits of insurance to society at large
* Achieving the necessary economies of scale that will make insurance affordable and accessible
* Encouraging the industry to leverage on synergies from mergers and acquisitions and other alignments to achieve superior product innovation, deeper market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market
penetration - the act of entering into or through something; "the penetration of upper management by women" and product distribution
LIST OF RECAPITALISED INSURANCE COMPANIES
NON-LIFE INSURANCE INDUSTRIAL AND GENERAL
INSURANCE COMPANY LTD
NICON INSURANCE PLC
AIICO INSURANCE PLC
LEADWAY ASSURANCE CO LTD
NIGER INSURANCE PLC
CORNERSTONE INSURANCE PLC
CUSTODIAN bailee (custodian) n. a person with whom some article is left, usually pursuant to a contract (called a "contract of bailment"), who is responsible for the safe return of the article to the owner when the contract is fulfilled. AND ALLIED INSURANCE CO LTD
EQUITY INDEMNITY INSURANCE indemnity insurance Managed care A type of health insurance in which a Pt can choose the hospital and provider, and the insurer reimburses the Pt or provider for a set percentage of the cost, minus deductibles and co-payments CO LTD
LAW, UNION AND ROCK INSURANCE PLC
GOLDLINK INSURANCE CO LTD
GUINEA INSURANCE PLC
OCEANIC GENERAL INSURANCE LTD
PRESTIGE ASSURANCE PLC
STANDARD TRUST ASSURANCE CO LTD
ZENITH GENERAL INSURANCE CO LTD
UNITRUST INSURANCE CO LTD
GUARANTY TRUST ASSURANCE CO LTD
SOVEREIGN TRUST INSURANCE PLC
WAPIC INSURANCE PLC
STANDARD ALLIANCE INSURANCE PLC
GREAT NIGERIA INSURANCE PLC
ROYAL EXCHANGE ASSURANCE (NIGERIA) PLC
CRUSADER INSURANCE PLC
ADIC INSURANCE CO LTD
LASACO ASSURANCE PLC
INTERNATIONAL ENERGY INSURANCE CO LTD
REGENCY ALLIANCE INSURANCE CO LTD
FORTUNE ASSURANCE CO LTD
CONSOLIDATED HALLMARK INSURANCE PLC
MUTUAL BENEFITS ASSURANCE PLC
NEM INSURANCE PLC
STERLING ASSURANCE NIGERIA LTD
LINKAGE ASSURANCE CO LTD
ANCHOR INSURANCE CO LTD
KAPITAL INSURANCE CO LTD
UNIVERSAL ASSURANCE CO LTD
YANKARI INSURANCE CO LTD
NIGERIAN AGRICULTURAL INSURANCE CO LTD
UNION ASSURANCE CO LTD
OASIS INSURANCE CO LTD
INVESTMENT AND ALLIED CO LTD
GUARDIAN TRUST INSURANCE CO LTD
NICON INSURANCE PLC
IGI LIFE INSURANCE CO LTD
AIICO INSURANCE PLC
GOLDLINK LIFE ASSURANCE CO LTD
LEADWAY LIFE ASSURANCE CO. LTD
NIGER LIFE INSURANCE PLC
OCEANIC LIFE ASSURANCE PLC
ZENITH LIFE INSURANCE CO LTD
CAPITAL EXPRESS INSURANCE CO LTD
UNIC UNIC United Nations Information Centre
UNIC Universal Satellite Home Connection
UNIC University of Canberra (Australia)
UNIC Uni Client
UNIC Universal Internet News Collector INSURANCE PLC
EQUITY LIFE INSURANCE CO LTD
ALLIANCE & GENERAL LIFE ASSURANCE CO LTD
GT LIFE ASSURANCE CO LTD
WAPIC LIFE INSURANCE PLC
STANDARD LIFE ALLIANCE ASSURANCE PLC
GNI GNI Gross National Income
GNI Global Nomads International
GNI Guyana News and Information
GNI Gay Naturists International
GNI Global Netoptex Inc.
GNI Great Northern Iron
GNI Gebäude Netzwerk Institut (German) LIFE ASSURANCE LTD
ROYAL PRUDENTIAL LIFE ASSURANCE PLC
CRUSADER LIFE ASSURANCE PLC
LASACO LIFE ASSURANCE CO LTD
ADIC LIFE ASSURANCE PLC
GUARDIAN EXPRESS ASSURANCE PLC
HEIRS LIFE ASSURANCE PLC
MUTUAL BENEFITS LIFE ASSURANCE PLC
AFRICAN ALLIANCE INSURANCE LTD
CORNERSTONE LIFE ASSURANCE PLC
UNION LIFE ASSURANCE PLC
NIGERIAN REINSURANCE CORPORATION
CONTINENTAL REINSURANCE PLC
Selling the message
JUST A WEEK AFTER the insurance regulator, the National Insurance Commission (Naicom) announced the result of the mandatory recapitalisation exercise, a headline in the one of Nigeria's newspapers read 'Insurance Stocks Dominate Price Table'. According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. the report, a dozen insurance stocks had made the 36-strong price-gainers' list during the previous day's trading.
This was a rare occurrence for Nigeria's insurance industry, but these are new times for an industry with a long history of chronic investor apathy. The re-capitalisation exercise saw the industry shrink from Verb 1. shrink from - avoid (one's assigned duties); "The derelict soldier shirked his duties"
fiddle, shirk, goldbrick
avoid - refrain from doing something; "She refrains from calling her therapist too often"; "He should avoid publishing his wife's 104 companies and five re-insurers to 71 insurers, made up of 49 companies, and two re-insurers.
Naicom's measures had also boosted industry capitalisation by 666% from N30bn ($244m) to N200bn ($1.62bn). Investors seeking decent returns had previously shied shied 1
Past tense and past participle of shy1.
the past of shy1 or shy2 away from insurance stocks, earning the industry the reputation of being a perpetual under-performer.
Insurance services have historically not been popular with the Nigerian public. Less than 1% of the country's population of 140m, according to the available statistics, has any form of insurance policy. Poor public awareness regarding the principles of insurance has not helped, and even among those Nigerians that do know the benefits of insurance cover, there remains a widespread perception that Nigerian insurers are reluctant to settle claims.
According to the Swiss Re Swiss Re is the world’s largest reinsurer, now that it has acquired GE Insurance Solutions (Ligi 2006). Founded in 1863, Swiss Re now operates in more than 30 countries. General Electric owns 8.9% of the firm. Global Report for 2004, the Nigerian industry had only 0.02% of the global market. The report ranked Nigeria 62 out of 88 countries in terms of annual premium volumes; 69th on life funds and a dismal 86th on insurance density.
With such a low insurance penetration level, it is hardly surprising that the industry's contribution to the country's GDP has remained below 1%. While South Africa's industry's premiums as a percentage of GDP amounted to 15.8% in 2004, Nigeria's was just 0.77%.
Previous efforts to raise the industry's capacity through increased capitalisation had barely achieved anything. Most insurance companies seemed to believe that remaining a small operator was the preferable strategy and organic growth through mergers and acquisitions was generally avoided.
In the past, the regulatory framework had had little effect with scant compliance with recapitalisation directives. Many companies adjudged to have met the 2004 mandatory capital increase had, in reality, attracted little or no fresh injections of funds into their operations.
Not so the latest capitalisation exercise. It had dawned quickly on the fringe On The Fringe is a popular Pakistani television show on Indus Music. It is hosted and scripted by the eccentric television host and music critic, Fasi Zaka and directed by Zeeshan Pervez. players that the merger option was the surest way to avoid imminent liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts.
A type of proceeding pursuant to federal Bankruptcy . As frontline front·line also front line
1. A front or boundary, especially one between military, political, or ideological positions.
2. Basketball See frontcourt.
3. Football The linemen of a team. players such as IGI, Leadway, Cornerstone, AIICO, Niger and others embarked on private placements, rights issues and IPOs to meet the new capital requirements Capital requirements
Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. , merger arrangements mushroomed. A dozen merger deals were concluded, with the groups usually adopting the name of the lead brand in the merger.
Encouraged by the seriousness of the insurance companies to transform themselves into key players, investors responded with enthusiasm. Official figures have not been revealed but consensus feelers from the industry have revealed that a couple of IPOs were greatly oversubscribed Refers to connecting more users to a system than can be fully supported if all of them were using it at the same time. Networks and servers are almost always designed with some amount of oversubscription, counting on the fact that everybody does not need the service simultaneously. whilst most rights issues and private placements recorded high success rates.
Even the international financial community gave its endorsement to the reform process. The International Finance Corporation (IFC (Internet Foundation Classes) A class library from Netscape that provides an application framework and graphical user interface (GUI) routines for Java programmers. IFC was later made part of the Java Foundation Classes (JFC). See JFC, AFC and AWT. See also ICF. ), the private sector arm of the World Bank, injected $14m as equity investment into the top player, Leadway Assurance, saying that the investment would enhance the insurer's institutional building programme.
According to IFC's director for sub-Saharan Africa, Thierry Tanoh, "IFC's investment in Leadway is our first in a composite primary insurer in Nigeria and it signifies our belief in the country's insurance industry and on-going reforms in the sector." He added: "It is becoming increasingly important for primary insurance companies in Nigeria to reach globally competitive levels and we believe that our investment in Leadway will be a catalyst for such growth."
The industry itself is responding to the momentum of this flurry of investment. Many companies are planning a fresh round of capitalisation. Remi Olowude, executive vice-chairman of IGI, believes "the biggest insurance company must not be smaller than the smallest bank" and has outlined his strategies for the company. IGI was the first Nigerian insurer to operate offshore with the company's June 2005 acquisition of a controlling interest controlling interest
The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail in the National Insurance Corporation (NIC (1) (Network Interface Card) See network adapter. See also InterNIC.
(2) (New Internet Computer) An earlier Linux-based computer from The New Internet Computer Company (NICC), Palo Alto, CA. ) of Uganda.
Olowude forecasts his company's capitalisation reaching N25bn ($203m)--the minimal capital for Nigerian banks--by year end 2008. A number of players (Leadway, AIICO, Royal Exchange, Cornerstone, Crusader and others) who, like IGI, have exceeded capitalisation levels may also be planning return trips to the capital market.
Even so, insurance operators are very much aware that fatter capital will not necessarily herald the era of mega companies that can compete at the global level. The industry's future will be determined largely by what it makes of the enormous growth potentials at home and on the continent and the post-consolidation challenges it faces in its immediate operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. .
The challenges for insurers in Nigeria in the post-consolidation era are as formidable as the vista of opportunities awaiting exploitation. Nigerian insurance companies are aware of the need to grow their contribution to the country's GDP and assume a leadership role in the African market.
Some of the challenges and opportunities include:
THE DEEPENING OF INSURANCE PENETRATION FOR PREMIUM GROWTH
Insurance penetration in Nigeria, with its 140m population, remains very shallow. The recapitalised primary insurers are now equipped with the wherewithal to achieve exponential growth Extremely fast growth. On a chart, the line curves up rather than being straight. Contrast with linear. in personal lines through massive branch expansion and the development, distribution and marketing of low-priced life products which will deepen the market and expand the premium base of operators.
Strategic increases in their 'bricks and mortar' presence across the country will assist insurance companies to take advantage of the government's pension reform act which requires employers with five employees or more on their payroll to take out a Life Policy in favour of each employee to the tune of three times the total annual emolument The profit arising from office, employment, or labor; that which is received as a compensation for services, or which is annexed to the possession of office as salary, fees, and perquisites. Any perquisite, advantage, profit, or gain arising from the possession of an office. of the employee.
The subsequent expansion in group life policies across the economy will yield a huge quantum of funds which will support investments in the economy and improve the bottom line of insurance operators.
IMPROVING PRODUCT DISTRIBUTION
The economies of scale arising from the consolidation should boost product distribution. More insurance companies will borrow a leaf from the channel marketing strategies of bank-owned insurers such as Guaranty Trust Assurance plc and Heirs Assurance which have tapped into the banks' large branch profile for the marketing and distribution of life insurance and investment-linked personal insurance products.
Optimising the oil & gas local content policy
A key objective of the insurance reform agenda is the strengthening of poor local retention capacity in the underwriting of big ticket risks, mainly due to historically poor capitalisation.
INDUSTRIAL & GENERAL INSURANCE CO LTD (IGI)
Industrial & General Insurance Co Ltd (IGI) is Nigeria's biggest insurer post-capitalisation with a capital base in excess of N10bn ($81.42m).
As Nigeria's leading provider of risk management services and financial security solutions for more than a decade, IGI is the insurer of choice for many major players in the key sectors of the Nigerian economy--including oil and gas, energy, construction and engineering, telecoms, aviation and marine--delivering professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. in life and general insurance and related financial services The examples and perspective in this article or section may not represent a worldwide view of the subject.
Please [ improve this article] or discuss the issue on the talk page. .
In recent years, IGI has embarked on a global presence strategy that has seen the establishment of offshore presence in other African countries and strategic business co-operation alignments with top insurance and reinsurance firms in Europe.
IGI became the first Nigerian insurance company operating offshore with its acquisition of 60% equity in the National Insurance Corporation (NIC) of Uganda in June 2005.
Established in 1992, IGI earned its commanding profile in West Africa's largest economy from a consistent record of strong financial capacity, high earnings and growth, consistent profitability, professionalism and technical expertise and a reputation for client service of the highest quality.
These, in turn, were achieved through IGI's policy of employing and developing performance-driven staff at all levels of the organisation and a deliberate fostering and nurturing of the company's core values of excellence, integrity and passion.
Only four years after it commenced operations, IGI became, in 1996, the first Nigerian insurance company to earn N1bn in annual premium income, having established market leadership through the demonstration of technical expertise and exceptional competence in the underwriting of specialised risks.
Today, IGI is the largest and fastest growing privately-owned insurance company in Nigeria, with shareholders funds in excess of N10bn ($8.14m) and assets of over N15bn ($122.12m).
IGI's special risks division includes the construction and engineering department manned by specialists and professionals with strong international experience and project exposure. This division also has a marine and aviation department that has handled and managed several big ticket risks, providing effective and competitive solutions for public and private institutions.
LEADWAY ASSURANCE CO LTD
Founded in 1970, Leadway Assurance has been a leading player in the Nigerian insurance market priding itself for its close attention to relationships, including strong brokerage ties. The company attracts 80% of its business from Nigeria's broker network.
The company emerged from the recent recapitalisation exercise greatly strengthened, attracting an equity injection of $14m from the International Finance Corporation (IFC). It recently won the prestigious THISDAY Insurer of the Year Award.
The pivotal point at Leadway is 'the customer' and the company has enjoyed a steady growth in its commitment to providing integrated insurance and financial services to its numerous clients. The company has substantial investments in key sectors of the economy including the major banks (it has a seat on the board of First Bank) and the telecommunications sector.
The company's remarkable success has been possible because of its sound professional and business standards backed by the integrity of its directors.
An uncompromising commitment to the integrity of service at Leadway was instilled by its late founder, Sir Hassan O Odukale. As an astute businessman, the founding managing director and later chairman of Leadway nurtured the company to achieve an enviable position in the Nigerian insurance industry. His vision of a dedicated service to all customers remains a guiding principle that shapes the policies of the company.
Leadway remains a private company with 28 shareholders, five of whom are corporate investors Noun 1. corporate investor - a company that invests in (acquires control of) other companies
company - an institution created to conduct business; "he only invests in large well-established companies"; "he started the company in his garage" , and one a trust corporation.
SOVEREIGN TRUST INSURANCE PLC
Sovereign Trust Insurance plc commenced business in January 1995 with an authorised share capital of N30m ($231,000) and a fully paid-up capital Paid-Up Capital
The total amount of shareholder capital that has been paid in full by shareholders.
Paid-up capital is essentially the portion of authorized stock that the company has issued and received payment for. of N20m ($154,000) following the acquisition and recapitalisation of Grand Union Assurances Ltd.
Currently the authorised share capital is N3.5bn ($28.45m) with a fully paid-up capital of N1.12bn ($9.1m) with ownership made up of 441 shareholders out of which a board of eight directors was constituted. The company is licensed as a composite insurer by the Federal Government with authority to underwrite To insure; to sell an issue of stocks and bonds or to guarantee the purchase of unsold stocks and bonds after a public issue.
The word underwrite has two meanings. all classes of Life and Non-Life business.
The company operates through a network of offices, with the head office on Victoria Island, Lagos, and four branches in Apapa, Port Harcourt Port Harcourt (här`kərt, –kôrt), city (1991 est. pop. 362,000), SE Nigeria, a deepwater port on the Bonny River in the Niger delta. , Ibadan and Abuja. Its vision is to be the best global provider of insurance services, striving to be a highly professional and innovative company by providing the best forms of insurance protection and risk management services to its various policyholders.
Sovereign Trust has assembled a management team made up of highly experienced professionals. The company is fully computerised and operates as a composite insurance company. The products and services offered cover Marine and Aviation, Motor, Fire, Theft, Personal Accident, Consequential con·se·quen·tial
1. Following as an effect, result, or conclusion; consequent.
2. Having important consequences; significant: Loss, Money, Workmen's compensation Workmen's Compensation n. a former name for Workers' Compensation before the unisex title of the acts was adopted. , Goods-in-Transit, Public Liability, Fidelity Guarantee, Professional Indemnity and other miscellaneous forms of insurance.
The company also specialises in packaging combined all-risks policies for various segments of the economy and comprehensive risk management services carrying out risk surveys and making appropriate recommendations to minimise loss impacts.
Adequate reinsurance treaties Reinsurance Treaty
(June 18, 1887) Secret agreement between Germany and Russia. Arranged by Otto von Bismarck after the collapse of the Three Emperors' League, it provided that each party would remain neutral if either became involved in a war with a third nation, and that , arranged by Glanvill Re and UAIB Re and placed with a consortium of reputable reinsurance companies. provides necessary support in the event of large claims.
Some of Sovereign Trust's major corporate customers include Celtel Nigeria (formerly VMobile Nigeria), MTN MTN
A short-form for Medium Term Note.
Medium term notes issued by corporations, much like shorter-term commercial paper.
See medium-term note (MTN). Nigeria, Shell Petroleum Development Co, First Bank Nigeria plc, Alcatel Nigeria Ltd and the Nigerian Civil Aviation Authority Civil Aviation Authority civil (Brit) n → Behörde f für Zivilluftfahrt .
In December 2006, Sovereign Trust Insurance plc officially listed with a successful rights issue and private placement, also implementing a four-way merger, absorbing Coral Insurance, Confidence Insurance and Prime-trust Insurance.
Having complied with the Naicom regime on capital adequacy to underwrite non-life risks, Sovereign Trust's corporate strategy is to grow its competencies, expand its offerings, and drive new markets while consolidating old ones.
It also intends to rapidly expand operational capacity through new investments in technology and is entering into partnership intended at building a strong non-life insurance franchise in Nigeria.
With improved financial strength, insurers are well-positioned to take advantage of the government's local content policy (LCP (Link Control Protocol) See PPP.
LCP - Link Control Protocol ) on the underwriting of oil and gas risks. The LCP grants local insurers the opportunity to insure 45% of oil and gas business in the economy (this will increase to 70% in 2010).
The LCP is designed to end the era of premium leakage occasioned by patronage of offshore insurers and re-insurers by the oil multinationals operating in the country. However, without the required level of underwriting capacity and financial strength, the LCP remains only a potential premium and capacity grower.
IGI, a leader in the Nigerian market on special risks underwriting, has been the first in positioning the industry for this challenge through its development of an oil and energy treaty. Supported by Lloyds, IGI's Energy treaty offers capacity in excess of $200m.
Boosting marine and maritime business
The Cabotage cab·o·tage
1. Trade or navigation in coastal waters.
2. The exclusive right of a country to operate the air traffic within its territory. Law provides the opportunity for high premium earnings for insurers in the marine sector, but operators must develop technical capacity to benefit fully from the incentives this law presents.
The industry is set for intense competition as companies face unaccustomed returns on investment mandates from shareholders whilst battling for a share of a market already transformed by the exploitable opportunities which had hitherto been beyond the reach of most players (oil and gas, marine, aviation, branch expansion, ICT (1) (Information and Communications Technology) An umbrella term for the information technology field. See IT.
(2) (International Computers and Tabulators) See ICL.
1. (testing) ICT - In Circuit Test. acquisition, etc). Emerging frontline players will raise the bar in product development, branding and corporate governance Corporate Governance
The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. . The challenge for the industry and its regulator Naicom is to prevent a return to the practice of rate-cutting and other unethical unethical
said of conduct not conforming with professional ethics. business practices which stunted the industry's growth.
Merged companies face the challenge of achieving a smooth and effective integration of varied technical and human capital capacities arising from the differing business models and cultures. This will achieve the best utilisation of resources.
Furthermore, the acquisition of the right ICT infrastructure to deliver fast and efficient customer-centric services, staff restructuring, skill development and re-orientation and attraction of skilled manpower are key integration issues.
The bane BANE. This word was formerly used to signify a malefactor. Bract. 1. 2, t. 8, c. 1. of the insurance industry has been its poor image due, in the main, to a negative claims payment reputation. Apart from the imperative of improving the claims performance of individual members and to regain public confidence, the reputation problem must be tackled at industry level through strategic and intense awareness and branding campaigns to create a positive industry image.
Armed with stronger finances, more Nigerian companies This is a list of Nigerian companies. The companies are currently listed by sector. The list is incomplete. Quasi-Governmental Corporations
The insurance survey was written by Niyi Obaremi