The shareholders of International Energy Insurance (IEI) Plc have given the Interim Board and the Technical Committee approval to recapitalise the company with N9 billion.
N4 billion initially approved at the 42nd Annual General Meeting had boosted the Nigerian insurer’s capacity to underwrite more risk. Analysts say such a strategy will make the company have a stable capital structure and take advantage of the opportunities abound in the Nigerian economy.
“With the injection of huge funds, the company is poised to perform better by working steadily under the NAICOM Risk Based supervision, by taking calculated risks coupled with technical know-how laced on global best practices,” the company said in a note to BusinessDay.
“With improved technology and service standards, the company will compete favourably among competition, bearing in mind that the IEI brand is a well-accepted brand. There is silver lining in the horizon for shareholders and investors.”
IEI is efficient and profitable, with combined ratios (CR) of 69.66 per cent are lower than the 100 per cent threshold. CR is the combination of loss ratio otherwise known as claims ratios and underwriting expenses.
IEI recorded positive real underwriting profit of N904.60 million despite tough and unpredictable macroeconomic conditions and lean operational purse.
Sharp drops in the price of oil and a severe dollar shortage have undermined premium income of insurers in Africa’s largest economy.
According to the National Bureau of Statistics (NBS), Nigeria’s economy contracted by 0.52 per cent in the first quarter of the year as the country was hit by first recession in 25 years. In the time of recession, consumers are less likely to take up a cover as they prioritise consumption for daily subsistence.
Inflation in the month of April stood at 17.20 percent, the highest in 11 years.
Insurers lost the revenue they could have realised from marine insurance as oil firms abandoned rigs due to incessant harassment and attacks on oil facilities by militant in the Niger Delta region.
The industry grew at an annual average of 19 per from 2006 to 2015, with premiums amounting to N313 billion at the end of 2015 and total assets of N941 billion, according to the Nigerian Insurance Association (NIA)’s latest data.
About 6 percent of Nigeria’s estimated 180 million people had some form of insurance at the end of 2015, compared with about 4 percent in 2013, according to the association’s latest data.
“On Corporate Social Investment, IEI has remained unbent through the years in championing eco- friendly projects that have impacted on life and society,” said IEI.
BALA AUGIE
