Ken Aghoghovbia, deputy managing director/COO, Africa Reinsurance Corporation (Africa Re), participated at the Nigerian Economic Summit Group held in Abuja. In this interview with Modestus Anaesoronye at the sideline of the event shares his thought on how insurance could contribute to evolving economic growth in Nigeria, reinsurance activities in the continent, and how Africa Re is sustaining the objectives of its establishment. Excerpt:
As a delegate at the last Nigerian Economic Summit Group, how do you think the insurance industry can position itself to contribute to the evolving growth of the economy?
This Summit aims at having very productive public-private dialogue. It is hoped that the role of insurance in addressing major problems of the economy would be better understood by policymakers. Governments should know that with available insurance products, NDDC for instance, is saved the trouble of running after contractors who abscond with payments advanced to construct roads or fail to perform to agreed standards. Also, farmers will be better positioned to secure funds for business expansion and not become dependent on family members after a bad season. At the end of the ongoing recapitalisation exercise, the insurance industry will certainly be better placed to contribute to the evolving growth in the economy.
Let us have an overview of the reinsurance market this year up to the third quarter of 2019?
I think the reinsurance market globally is responding to claims development from certain lines of business. We have seen a lot of withdrawals in certain classes like aviation; we expect capacity to shrink in those areas. So, a lot of the underwriters are actually going back to the basics. We don’t have that big jump in rates, but each company is taking policies to ensure that pricing is proper. I think with these developments, the market is on the positive path. So, this year, I have not seen many catastrophe claims here in Africa, so we expect a better result.
How would you describe the reinsurance market in Nigeria, and what challenges do you see as hampering the growth of the market?
Looking at the Nigerian reinsurance market, we would be talking about the national players – largely Africa Re, Continental Re, Nigerian Re, there is also WAICA Re and then the non-national companies that actively participate in special lines and facultative businesses, like oil and gas, aviation, and also following in some of the treaties. The competition in the market is quite keen, you have the strong ones that do more of proper pricing, you have those who are writing for volume, but generally, I think there is descent play in the market.
The insurance industry in Nigeria is currently embarking on a recapitalisation exercise, how do you see this impacting to make the industry move forward on the path of growth?
Yes, in my opinion, I think it’s overdue. I also think that the initial step by the regulator that is the TIER Based capital is a good one, which is like risks based capital. I think it was a good one if they had given enough time to the operator’s to achieve their capital target. This new capital requirement, that is, 8 billion naira for life and 10 billion naira for non life and 20 billion naira for reinsurers is good. I believe that we have learnt some lessons against the background of the health of many of the insurance companies in the market today. Many of them appear to be technically insolvent, and even if they are not, some of them are struggling with liquidity and ability to meet their obligations. It is very important that that the issue of capitalisation, with governance are strengthened in a bid to move the industry forward. So, I am in support of the regulators doing something about it.
At the end of the recapitalisation exercise, we are hoping that some companies will find mergers, what number from the existing 59 do you see meeting the requirement?
Well, first I expect the number to come to somewhere around 30, plus or minus, which is not a bad number. But what is the right number, I think that will depend on many factors, primarily how much capital is being attracted into the market. If we have more capital, then the number could be higher but if not we hope to see mergers and acquisition to ensure that the market is not disturbed.
What will be your advice to the operators at this time as they go through the exercise?
There is a regulation guiding the exercise, which is within the authority of the regulator. It’s therefore important that the market players and insurance companies work towards achieving this timeline and whatever needs to be done should be done quickly, and all hands need to be on deck to see that there is a smooth exercise.
Give us an insight into how Africa Re has continued to sustain its objective of developing the African market?
Our mission as an institution was and still remains to foster the development of insurance and reinsurance industry in Africa; to promote national, regional and sub-regional underwriting retention capacity; and to support African economic development. For this reason, you see Africa Re providing technical training for the market. You are aware of the Young Professionals Programme we are running and providing training to so many young Africans, to not only create awareness but also to educate them on what insurance is all about. The demand is so huge that we are upping the number that will be going in the next phase. We are doing it free as part of our Corporate Social Responsibility. We have shown a lot of interest in agricultural sector, as you may be aware, working with the World Bank.
We are looking at products to help the African market have food security; we are currently looking at how we can support African governments provide energy for its population. Most financiers are afraid to put their money in this market without a security backing. Africa Re is lucky to be the only ‘A’ rated company in this part of the world, so we are looking at leveraging on that to help many governments in Africa that are pursuing their energy agenda. We are pleased when we see some of the governments make this stride, like today, Egypt has sufficiency in energy. So, we wish to see that in Nigeria and many other countries because we know the effect that could have on businesses and economic development.
Africa Re recently won the NAIPCO Award as the Developmental Promoter of the Insurance Industry in Nigeria for 2019, what does this mean for the Company?
Africa Re has received many awards, within and outside the Continent, but the award we got here in Nigeria our host country means a lot to us. We are really flattered, we feel challenged on what will be our next initiatives to make the award really, really meaningful to everybody. So, we are encouraged, and certainly we will not rest on our oars, so that we will continue to give same support to the industry and the continent.
