Cornerstone Insurance thinking consolidation in the ongoing recapitalisation exercise
...as firm raises fund to meet requirement
Cornerstone Insurance Plc is looking at a bigger picture of a consolidated company post recapitalisation, where the brand is going to compete effectively with benefits of stronger capacity, synergy, robust human capital and higher technical capacity.
This is as the company is already financially comfortable to meet the regulatory requirement for firms in its category in the ongoing recapitalisation exercise in the industry.
Ganiyu Musa, group managing director/CEO of the firm said during a press conference in Lagos that the company is in a comfortable financial situation to scale through the exercise, adding that, it has disposed investment property along Lekki axis, and that has increased its liquidity to meet and surpass expectations.
He stated that the company would have loved to keep the property for the long run, but was challenged with the fact that real estate investment is not admissible in the ongoing recapitalisation exercise.
This, according to him, necessitated the sale of the building for a handsome amount that covers the cost of the building project and still left with profit.
“We wanted to hold the building for the long term, but under the ongoing recapitalisation, real estate investment is not admissible. So, we took the decision of selling the property and we made handsome profit from it. This has put us in a stronger financial position to scale through the exercise, while making our balance sheet stronger and healthier,” he posited.
Aside this, he said, there are preliminary discussion with two or three underwriting firms on consolidation to make Cornerstone brand a stronger one, post recapitalisation.
Musa believes that consolidation makes better economic sense during recapitalisation rather than throwing in capital, adding that, consolidation nurtures expertise, improves technical capacity aside the financial strengthening it brings to the adopting company.
He said cornerstone Insurance came out from its loss position of N1.7billion in 2017 to N1.8billion profit in 2018, even as the 2019 profit outlook is showing sign of higher profit from that of the previous year, judging from its 2019 third quarter report.
The company, he noted, is fulfilling its civic obligation of paying genuine claims as and when due, investing in information technology to give customers the best and seamless services while working towards ensuring that shareholders gets good returns on their investments.
According to him, the fund pooled in the recapitalisation, would enable operators undertake good underwriting; make good investment; deploy robust technology and develop human capital.
The National Insurance Commission in the ongoing recapitalisation mandated underwriting companies with composite licence to upgrade their capital base from N5 billion to N18 billion; Life insurance firms were required to increase their minimum capital requirement from N2 billion to N8 billion, amounting to 400 per cent increase in their capitalisation.
Similarly, General insurance companies are to raise their capital base to N10 billion from N3 billion, even as Reinsurance Firms will now need N20 billion capital base to operate Reinsurance business in the country.