In this interview with NIKE POPOOLA, the Managing Director, Consolidated Hallmark Insurance Plc, Mr. Eddie Efekoha, who is also the Chairman of the Nigerian Insurers Association, speaks on prospects of the underwriting industry
How will the enforcement of compulsory insurance impact the insurance market?
We have had compulsory insurances in our Act, but these compulsory insurances are as good as no insurance because they have not been enforced. The ones that were taken away from us; workmen compensation and pension, have made so much headlines because enforcement had supported them.
What should be expected from the capital verification of insurance companies?
Capital verification is one of the priorities which the regulator has put in place for this year. I do not believe that we should be talking of raising more capital when all of us who are in the business do not seemingly have the same capital. First of all, let us be sure all of us have attained that minimum capital – N5bn, N3bn and N2bn or N10bn as the case may be.
When that has been done, we can talk about the risk based capital. The risk based capital is not something that will come overnight. We are all waiting and expectant. We believe that at the end of the day, it will come and it will help us to grow. For Consolidated Hallmark, we are more than compliant as far as the N3bn category is concerned. If you check out books, we are far in excess of the N3bn we are required to have
How prepared are you for risk based supervision?
When it comes to risk based capital, it depends now on the methodology that will be adopted; whether the methodology of solvency II model or some other methods. Even South Africa is operating a method different from what the United Kingdom is employing.
So, at the end of the day, whatever method that is operated, we will look at it. I believe that we should be able to meet it. As you will see very soon, when we release notice on our annual general meeting, you will notice we are about commencing a capital raise.
That is just to shore up and prepare us for the opportunities that will arise in the market. We are ready, and it is good that out regulator is thinking of verifying capital because that is the beginning, and then we build on it by the risk based capital and we see how we will take opportunities from that.
How did Consolidated Hallmark meet the last recapitalisation exercise in the industry 10 years ago?
Ten years ago, some developments took place in the insurance industry. Principally, we know of the recapitalisation that was induced by government through the National Insurance Commission. It spanned over a period of eighteen months and ended February 8, 2007.
While some people saw it as an opportunity, others saw it as a challenge. For us, we saw it as an opportunity to increase in size. So, rather than go into it alone; we decided to go as a team in other to build capacity. So, our way of responding to the recapitalisation was to go through a merger.
It was a merger of three companies. They were Consolidated Risk Insurance Plc, Hallmark Assurance and Nigerian General Insurance Company. Fortunately, we did that and NAICOM issued us a license. So, by March 1, 2007, we opened business in the name of Consolidated Hallmark Insurance, taking advantage of our brand combination and this reflected in the choice of our name today.
That was how we came about the company we are operating today. We are celebrating 10 years of existence from the time of the merger, not when the merging entities came into the business of insurance. There were many stakeholders in the merger and the first to be given kudos are the investors that went through the court ordered meetings that gave birth to this merger.
All of us can vividly remember what happened then, when we all had to face the wall of NAICOM office in Abuja like students waiting for the result of an exam. Until your name was called, you were not sure you had scaled through.
After a successfully recapitalisation, what means did you put in place to build the new brand?
As soon as we concluded the process of getting our license from NAICOM, we came back happy and the process of integration started. In integrating, we looked at key functional areas of the business.
The issue of staffing was critical because we ensured that we didn’t lose our best hands. We were also mindful that we needed to ensure we raised our standard and had a minimum benchmark.
We had committee empowered by the board and they went round all the company locations, conducted fresh interviews and as soon as you crossed the minimum benchmark, found fit and proper and age was on your side, you had a space.
So, when that was concluded, we issued ourselves fresh letters of appointment. That is why as we celebrate 10 this year, many of our staff who were part of us at the beginning have clocked 10 years working with us. We also worked on the technical side of the business and integrated all the operations and processes. We thank God we are where we are today.
Ten years after recapitalisation, some firms have gone down. How have you been able to cope with changing economic challenges?
We cannot say it is by our power. Attaining 10 years is by God’s grace. They said the race is not for the swift. So we cannot say that we are strong to have survived the past years or everything was just by our own power. I think God got us to where we are.
It is unfortunate if any company fizzled out within this past 10 years. I would not say maybe they did not pray hard enough, but for us we prayed and also worked very hard. This is a service business. So it is largely premised on people and if you don’t have the right people you are not going to be able to make it.
So, as soon as we concluded the merger, we had a retreat where we agreed our core values and also agreed to change our logo and all that stuff.
By the time we agreed on core values, we saw that the core values of professionalism, relationship, integrity, customer focus, excellence are people determined not machines. It is only people that can drive them, and so we came up with this offline “We are what we have.”
We focused on people and have continued to build on our strength and capacity. We tried to select rightly and that is not to say we did not make mistakes.
We also emphasised on technology, which are needed to help our people deliver. People alone cannot deliver and so we emphasised technology. You remember we are the pioneer promoter of online third-party policy and, the acting commissioner for insurance at that time was on ground to flag it off, and we went all round town. Bye and large, the product got matured and we went on.
In between, we realised that if we must survive, we needed to pay attention to the key stakeholders that made this merger possible. How do we respond to them? By paying dividends! We did not pay dividend all the years, but we paid dividend most of the years we existed after the merger.
It will interest you to know that a company that was capitalised a little over N3bn has paid to date about N960m dividend and by the time this year’s own is added, we would have crossed N1bn mark. This has helped us to move from our year zero to year 10.
The principal thing in our business is the payment of claims. So, we made sure that in these ten years we have paid claims the way it is supposed to be paid, against the perception out there about insurance. So, each year when we go out to say happy New Year to our clients and brokers, we are encouraged about the comments they pass on us on our claims paying practice.
So, we are getting our own share of the market. It could be better but we are grateful to God. And we have enjoyed the cooperation of our board, being that they gave us freehand to operate and there is absolute trust between board and management and this has taken us to where we are today.
What impact has recession made on the insurance industry?
Recession is a matter of a very short time. Recently, the World Bank said Nigeria was out of recession and the presidency said they are conscious of it and they are waiting for the figures from the Bureau of Statistics. Truly, you will feel it.
Yes, we are beginning to feel it. When we were in recession, we felt it. Now that we are getting out, we are also feeling it. If the Federal Government can fund the foreign exchange demand the way they have done and have been doing it, we would not have got to this level.
For them to have funded it and still grow reserve is a pointer to the fact that we are out of it. And when you look at it sector by sector, you find out the financial services did not really go down like that. Oil and gas ran into hitches, no thanks to restiveness and insecurity by the boys.
However, a few visits initiated by the presidency and anchored by the vice president and talking to the leaders and the boys have brought the whole situation under control. Just a word of reassurance, we value you; we are part of you and all that. We no longer hear bombing of pipelines and all that.
Every individual is important, even in our companies. Recession yes! It takes time for values to go up; it will also take time for it to come down. There have been job losses here and there, but the ingenuity in us has also helped us to remain growing and insurance has really found relevance in the current situation.
The current situation has taught people on the need to save and that has further re-echoed the need for insurance. While it lasted, it impacted the business, no doubt. The capacity of most of us to buy insurance was limited. Some factories closed down and all of these impacted on the business.
Going forward, what are the prospects of the insurance sector?
The indices are clear. If you look around, you will see that a lot of our friends from outside Nigeria are looking at Nigeria and if they are doing so, then you don’t need any one to tell you that there is something good about us or a potential they are seeing. It then means that those of us here should equally watch out.
You have seen that the Minister of Finance recently engaged the market and has continued to engage the market to unlock its potential. This has been further strengthened with recent developments in NAICOM and all of these are to help harness the potential of the industry.
Unlike before, government is beginning to understand that in its bid to grow the economy, to get out of recession insurance cannot be handled the way it had been. For us as operators, we should roll up our sleeves and see how we can take advantage of the opportunities in our industry.
Portland Paints, Chemical and Allied Products Plc Agreed to Merge
Portland Paints and Products Nigeria Plc and Chemical and Allied Products Plc have agreed to merge, according to the latest statement from both companies.
In a statement released through the Nigerian Stock Exchange, the Board of Directors of CAP said we are “pleased to inform you that following discussions and negotiations, the Boards of CAP and Portland Paints have reached an agreement to undertake a merger between both entities (the “Merger” or the “Proposed Merger”).
Accordingly, we “hereby present to you the terms and benefits of the Proposed Merger for your consideration and seek your support and approval to effect the Proposed Merger.
“The Proposed Merger presents a compelling opportunity to create significant value for shareholders of CAP and achieve the company’s strategic growth objectives as a larger company with a broader product portfolio, more corporate owned brands and diversified revenues.
“The resultant entity is also expected to benefit from enhanced distribution capabilities in addition to economies of scale and operational efficiencies.”
Tony Elumelu Acquires Shell, Total, ENI Stakes in OML 17
Tony Elumelu owned Heir Holdings Limited and its related company Transnational Corporation of Nigeria Plc on Friday announced it has completed the purchase of 45 percent stake in Oil Mining Lease (OML 17) through TNOG Oil and Gas Limited.
The acquisition includes all assets of Shell Petroleum Development Company of Nigeria Limited (30 Percent), Total E&P Nigeria Ltd (10 percent) and ENI (five percent) — in the lease.
It was further stated that TNOG Oil and Gas Limited will also have the sole right to operate OML 17.
The field presently has a production capacity of 27,000 barrels per day. Also, there are estimated 2P reserves (proven and probable) of 1.2 billion barrels and an additional one billion barrels in possible reserves — all of oil equivalent.
A consortium of global and regional banks and investors provided a financing component of $1.1 billion for the largest oil and gas financing in Africa in over a decade.
In a statement released on Friday, Shell said the completion was after all the necessary approvals have were received from authorities.
“A total of $453m was paid at completion with the balance to be paid over an agreed period. SPDC will retain its interest in the Port Harcourt Industrial and Residential Areas, which fall within the lease area,” the SPDC said.
Speaking after the completion of the deal, Elumelu said “We have a very clear vision: creating Africa’s first integrated energy multinational, a global quality business, uniquely focused on Africa and Africa’s energy needs. The acquisition of such a high-quality asset, with significant potential for further growth, is a strong statement of our confidence in Nigeria, the Nigerian oil and gas sector and a tribute to the extremely high-quality management team that we have assembled.
“As a Nigerian, and more particularly an indigene of the Niger Delta region, I understand well our responsibilities that come with stewardship of the asset, our engagement with communities and the strategic importance of the oil and gas sector in Nigeria. We see significant benefits from integrating our production, with our ability to power Nigeria, through Transcorp, and deliver value across the energy value chain.
“I would like to thank Shell, Total and ENI, for the professionalism of the process, the Federal Government of Nigeria, the Ministry of Petroleum Resources, and the NNPC for the confidence they have placed in us.”
Tony Elumelu is the Chairman of Heirs Holdings Limited, Transcorp and United Bank for Africa Plc.
Exporters Say CBN Pre-export Requirements is Frustrating Export of Goods
Exporters have said the recently introduced pre-export requirements by the Central Bank of Nigeria is creating unnecessary bottlenecks for exporters and the movement of goods out of the country.
Exporters, who spoke under the aegis of the Network of Practicing Non-oil Exporters of Nigeria (NPNEN), said the electronic Nigeria Export Proceed Form now required by financial institutions from exporters had come with so many challenges.
Ahmed Rabiu, the President, NPNEN, explained that the new policy had several requirements that often led to delays and loss of income on the part of exporters.
He said, “We acknowledge the CBN’s desire to ensure that all exports out of Nigeria are documented in order to ensure that the proceeds of such exports are repatriated.
“However, the reality on the field shows that the process is causing undue delays and consequently, encouraging corruption.”
According to them, in the new pre-export requirements, the Central Bank of Nigeria wants an export transaction to be initiated through eNXP processing on the trade monitoring system.
After which exporters are expected to have a pre-shipment inspection agent, the Nigeria Customs Service and other designated government agencies carry out their pre-export inspections.
The exporters said the pre-shipment inspection agent was expected to issue a clean Certificate of Inspection while Customs would issue the Single Good Declaration. All these they said takes time and delay goods from leaving the country on time.
Pointing to a recent report, they said about N868 billion worth of goods bound for export were stuck at the ports due to the new policy.
Speaking further Rabiu said, “For example, for the PIA to issue the CCI, the exporter is required to upload a certificate of origin as one of the supporting documents for the eNXP.
“The PIA is also required to upload the CCI to the TRMS(M) and until this is done, the Customs service will not issue the Single Good Declaration.”
He added, “After issuing the SGD, the customs is further required to upload it into the TRMS before the goods are allowed to be gated into the port and loaded on the vessel by the shipping line.”
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