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Royal Exchange Boss Highlights Insurance Sector Challenges

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insurance
  • Royal Exchange Boss Highlights Insurance Sector Challenges

The insurance industry, in the face of the economic recession plaguing businesses in Nigeria, is faced with two critical challenges.

These are challenges of huge claims coming the way of the industry operators in 2016 in particular as a result of negative impact of climatic change and the challenge of improving their capacity building to insure huge businesses locally in place of current trend of ceding such risks abroad.

The Group Managing Director, Royal Exchange Plc, Alhaji Auwalu Muktari, who disclosed this in an interview in his office in Lagos, said against the backdrop of the economic recession , premium generation has not really been a serious problem to insurers but huge claims experience coming their way particularly this year as a result of negative effects of climatic change.

The Royal Exchange boss, said: “In the year 2016, we envisaged a lot of claims coming our way due to climatic change. There has been heavy rain in the northern part of the country, before now, it has not been like that. With the climate change, there is heavy rain in the north this year.

We have not seen that before in the north we have only seen it in the south so they are not prepared for it. So many houses have been affected; also the terrorists activities have caused a lot of pipeline vandalism, the terrorists activities in the north, in form of Boko Haram, many police, soldiers were killed, and these have group life cover. Houses were damaged; all these brought a lot of claims to the industry in the current year. There are a lot of factors that have affected claims rate in this 2016.”

On the way forward for the industry, Muktari, said the most important thing is how to increase operators’ capacity of doing businesses so that the industry will have larger capacity to accommodate more risks instead of ceding huge risks outside the local market.

He said with improved capacity, operators can focus and reposition the industry so that they can retain more risk in the local market and with retention of more businesses locally, there will be creation of more jobs for the teeming population of Nigerian youths.

He said with improved capacity, there will also be rapid growth of the insurance industry, and there will be a lot of funds for shareholders to enjoy and the industry will become one of the greatest industry in Africa and part of the world in general.

Speaking on the impact of the recession on premium generated by the industry, Muktari said insurance is not isolated from the real effects of the recession.

According to him, the industry has been part of the economy and what affects the Economy affects the industry.

He however said despite this, his company did excellently well this year in terms of premium generation.

“If I am to talk particularly for my company Royal Exchange, I will say that we are doing very well business wise. In fact, I can even tell you I am doing better than I did in 2015 despite the challenges and economic crisis in the country. But still we can do better if situations were normal and things were in the right position. We can do better if everything is going well with other sectors of the economy”, he stated.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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