Nigeria: Insurance Recapitalisation - Not Yet Uhuru - AllAfrica.com

Agha IbiamLagos

The out-of-court settlement reached between the Federal Soldier Government and NICON Insurance have not resolved the job the company is contending with as two companies, AAL and IGI are battling to see who goes the core investor in the coverage giant.

In the last few old age the Nigerian coverage industry have received considerable attention. A few old age ago, the public viewed coverage with contempt. This credibleness spread created not a little job for the sector. However, the consolidation of the banking industry made attending to turn to the coverage sub-sector. The recapitalisation moving ridge that swept through coverage saw a crisp decrease in the figure of coverage companies as many were forced to unify or be acquired by larger companies. The rest, as it is commonly said, is history.

However, in the last 1 twelvemonth until the recent out-of-court settlement, the Federal Soldier Government had been at stickers drawn with the Jimoh Ibrahim-led NICON Insurance management. Ibrahim a lawyer and investor in the oil and gas sector had gone to tribunal to dispute the powerfulness of the authorities to take over the direction of the coverage company from him. The National Insurance Committee (NAICOM) also took certain steps, such as as the suspension of the board and direction of NICON Insurance, the board of Federal Soldier Republic Of Nigeria Re-Insurance and the fundamental law of an interim direction and boards for the companies.

On one side too, the Industrial and General Insurance Plc (IGI) had shown involvement in purchasing the Federal Government's equity retention in the company and was declared the modesty bidder by BPE. The NICON Insurance direction led by Ibrahim that bought government's controlling shares viewed government's action as misdemeanor of the ownership construction and governing regulations of the companies as contained in the memorandum and articles of association of the companies and relevant laws and took the Federal Soldier Government to court.

In a release issued by NAICOM in Capital Of Federal Republic Of Nigeria on December 6, 2007, the committee gave a figure of grounds why it sacked the direction and boards of NICON and Nigeria Re. The committee noted that the place of the company's payables but not paid as at November 21, 2007, amounted to N12.2 billion. It added that these outstanding liabilities had been the topic of continued awkward ailments from clients and suppliers.

It said NICON used to have got one of the strongest reinsurance securities inch the coverage industry covering life, general business, aviation, oil and gas by the first re-insurer in the human race and other regional and local reinsurers. According to NAICOM, the prima reinsurers were forced to retreat screen to NICON followers the company's failure to settle down needed insurance premiums and the withholding of reinsurance recoveries paid in regard of claims of major clients like NNPC. According to NAICOM, the reinsurance contract for NICON was subsequently transferred to Federal Republic Of Nigeria Re.

Interestingly, according to NAICOM, all insurance companies were required by law to keep investing in specified instruments and keep a registry of such as investings in the principal topographic point of concern of the insurer. The committee accused NICON of breaching the Insurance Act by transferring all its investings and investible finances to a 3rd political party company, NICON Investing Limited largely owned by Ibrahim. NAICOM said through this company, NICON Insurance finances were transferred to other companies registered as NICON but not having common ownership with NICON Insurance Plc.

Concerning Federal Republic Of Nigeria Re, NAICOM stated that the company was registered to accept the hazards of reinsurance from all over the world. However, by a direction buy-out inch 2003, the Federal Soldier Government reduced its retention to 49 per cent. According to the commission, the 51 per cent direction buy-out was funded by commercial banks, which later assumed ownership of those shares as a consequence of failure of the directors to refund the loan. The shares later transited to individuals, corporate bodies, and the Jigawa State Government. The shares of Jigawa State Government were sold to Global Fleet in 2006.

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NAICOM said prior to the entry of Global Fleet, the corporation had made important attempts to beginning finances through confederation with a foreign coverage firm, which had signed an MOU for the injection of 50 million dollars and also a private arrangement in the Nigerian marketplace to shore up its working capital base. These efforts, the committee said, were set in suspension followers the entry of Global Fleet, with the promise of a fresh working capital injection. But it was only the Federal Soldier Government through BPE that injected a fresh monetary fund of one billion naira into Federal Republic Of Federal Republic Of Nigeria Re.

All these made the authorities to step in to salvage both NICON and Nigeria Rhenium from collapse. Government's intercession did not include inviting Industrial and General Insurance Company Limited, which ought to have got been the preferable bidder going by its statement of claim in a lawsuit it filed at the Federal Soldier High Court, Abuja. By a missive dated February 28, 2008, President Umaru Genus Musa Yar'Adua approved that the lawsuit instituted by Ibrahim against the Federal Soldier Government be settled out of court.

The footing of colony included: "that within a time period of 60 years of the origin of this agreement, the sum of money of money of N17.3 billion shall be injected by the shareholders, to ran into the funding spread and recapitalisation threshold to enable NICON Insurance obtain licence as a composite insurer; in regard of Federal Republic Of Nigeria Re, the sum of N7.3 billion shall be injected by the shareholders, in conformity with NAICOM's recapitalisation demands as a pre- needed to go on as re-insurers. Within 30 years of origin of this agreement, the complainants shall ask for the hearers to reconfirm the funding spread of N17.3 billion," the understanding stated.

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Africa: 'Nigerian Insurance Industry Most Capitalised in Continent' - AllAfrica.com

Nnamdi DuruLagos

The regulating organic structure for coverage pattern in Federal Republic Of Nigeria , National Insurance Committee (NAICOM) have got confirmed that the capitalization demand in the country's coverage industry is the peak in the African continent.

And as portion of attempts geared towards encouraging adequate engagement of Nigerian coverage companies in the underwriting of hazards emanating from oil and gas trading operations in the country, stakeholders in the industry have kicked against the demand mandating coverage companies to set up amalgamate balance sheet for members of the group.

Commissioner for Insurance, Mr. Fola Daniel, made this verification while addressing newsmen in Lagos yesterday. He also disclosed that coverage chemical bond have got since go generally acceptable by stakeholders in importation and exportation business, particularly the Nigerian Customs.

Reviewing some of the up-to-the-minute developments in the industry, the Commissioner confirmed that the industry's capitalization is the peak in the continent even as coverage pillory have remained the toast of investors over time.

"Our industry have the peak capitalization demand in Africa. It have got recently go investors' delectation as evidenced by the Nigerian working capital marketplace where coverage pillory have consistently ranked the most patronised for upward of six months", he said.

Daniel also stated that the industry would not remainder on its oars but would go on to guarantee that past accomplishments would function as springtime board to establish the industry to enviable heights.

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The commissioner also reviewed attempts of stakeholders in oil and gas business, peculiar as it associates to coverage saying "we are fine-tuning the local content policy of the Federal Soldier Government on coverage which deduces from subdivision 72 of the Insurance Act, 2003.

"This policy is one of the very moneymaking countries the industry is yet to optimise their benefits. The fine-tuning procedure includes all attempts at eliminating deterrents to the engagement of local coverage companies in the oil and gas sector".

He also disclosed that oil and gas companies have got been advised to take some of the constrictions that used to suppress the engagement of local insurance companies in oil and gas underwriting concern before now.

Nigeria: Insurance in Nigeria is Now for Real - Dere Otubu - AllAfrica.com

Patience SaghanaLagos

Mr Dere Otubu, Chairman, Staco Insurance Plc, states coverage concern in Federal Republic Of Nigeria now is for real.In this interview with Patience Saghana, Mister Otubu who is the pillar of Staco Insurance talks on the factors driving enlargement into the Occident African sub-region.

Mr Dere Otubu, Chairman, Staco Insurance Plc

He talks on local content policy of the federal authorities in the oil and gas industry and the demand for execution of subdivisions of the Insurance Act 2003 concerning mandatory coverage of edifices and the projected share offering by his company and more. ExcerptsMarket share?We have got invested in a mortgage banking business. We have got concluded programs to open up new subdivisions in Sierra Leone and Liberia. The Sierra Leone subdivision should be up and running in the adjacent 30 days.

We are also going to set up in Gambia, Republic Of Ghana and somewhere down in Republic Of Angola or southern African countries. Last twelvemonth have been a very good twelvemonth for us; we mean to declare a bumper dividend to our shareholders. We were able to excel all our marks This impressive consequence we were able to accomplish was as a consequence of good staff, good way squad and good board direction. We are moving on to the adjacent degree of our concern now. We are conquering Nigerian and we desire to suppress more. We desire to do certain we have got subdivisions in the 36 states of the federation to cover the state effectively. Staco is also determined to go a 1 halt fiscal establishment and not just a company specialising in coverage business. That is why we are going into mortgage banking; we also have got a subordinate which specialises in places business. Later in the year, we mean to commence life and wellness coverage business. We have got got already applied to the National Insurance Committee for life coverage and we have already incorporated our wellness company.

By the end of this year, Staco is going to be a very robust company with about five or six major subordinates and subdivisions across the Occident African sub_region. The working capital alkali of the company would also have got increased to about N20 billion. We mean to near the working working capital marketplace very soon to raise funds.

Additional capital?

As you cognize Staco is a public quoted company, we have got held an other ordinary full general meeting to let our stockholders to O.K. our proposals. This was to enable us store for up to N15 billion at the working working capital market, as well as addition the company's authorised share capital from N2.5 billion to N3.5 billion. Today, we have got between 8000 and 10,000 stockholders and we cannot take them for granted. We will always seek their blessing for anything we are going to do.

Insurance stocks?

Every where in the world, the coverage companies control the economic system because of the manner we bring forth our revenue. We are into life, general business, wellness insurance, oil, motor coverage and all that. In the developed states of the world, coverage companies ain virtually everything and they have the banks.

But in Nigeria, it is a contrary scenario. But for the first time, we at Staco are put to have depository financial institution too. All these Banks have got a working working capital of more than than N25 billion and our capital is N5 billion. We necessitate to renew customers' assurance in coverage business. The investment populace cognizes that with the new share working capital we now have, the existent coverage companies have got got come up to remain and that they will be able to stand up the diagnostic test of time.

That have renewed assurance in them. There is increased consciousness about coverage now. Insurance is now the chief focusing of the economic system and as that grows, we will do money. Every investor cognizes that if there is any topographic point to do money today, it is insurance. I can guarantee you that if you set your money in coverage stocks, you are going to do more than money.

Expansion?

The human race is a planetary village. Nigeria, from no where, is a beginning to take control of Africa. In Sierra Leone the powerfulness works that powerfulnesses the state was taken there by a Nigerian company. Such a thing have to be insured. The coverage companies in these states make not have got the capacity to transport immense risks.

In Occident Africa today, Nigerian companies are all over the place. The people necessitate an coverage company they can recognize. So, we desire to be that trade name that the Nigerian community, the foreign community, and the Nigerian concern work force all over Africa can place with, trade with and still experience at place that they are doing insurance.

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If you travel to a topographic point like Sierra Leone now, there are about eight Nigerian Banks operating there at present, who is going to see them? We are going there to do money, not just to open up shops.

Consolidation in coverage brokerage firm arm?

Consolidation conveys strength to different companies. Staco is a littler company about two or three old age ago, but today, Staco is a large company. We are strategizing to be among the top three insurance companies in the state and by the saving grace of God, in twelvemonth 2009; we should have got attained that position.

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