• Friday, February 23, 2024
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De-risking investments enables increased capital inflows into Nigeria – Bryan Howett

De-risking investments enables increased capital inflows into Nigeria – Bryan Howett

BRYAN HOWETT, chief financial officer of Africa Specialty Risks (ASR), a pan-African (re)insurance company, was in Nigeria recently with his team. Their visit principally was to attend the Global Trade Review West Africa conference and introduce ASR’s specialty insurance solutions to Nigerian corporates and investors. BusinessDay caught up with him in Lagos and he shared some insights on the benefits of risk mitigation for an economy like Nigeria. DANIEL OBI brings these excerpts.

Kindly provide insight into ASR and who you are

Africa Specialty Risks (ASR) is a pan-African (re)insurance business focused on providing comprehensive, bespoke risk mitigation solutions to the African Corporate and Specialty market. ASR was established in 2020, by Mikir Shah, former CEO of AXA Africa Specialty Risks, and myself, Bryan Howett, former CEO of Old Mutual’s pan-African re-insurance operations. ASR is backed by Helios Investment Partners via its latest fund, Helios Investors IV, L.P., whose underlying investors include British International Investment (the UK’s development finance institution, formerly CDC Group), and the International Finance Corporation (a member of the World Bank Group).

ASR currently offers risk mitigating solutions across a wide range of business lines, namely, Construction, Political Risk Insurance and Trade Credit, Political Violence and Terrorism, Property, Energy, Liability, Parametric, K&R and Security Risks. The latter reflects our commitment and expertise to catering to the diverse needs of businesses and investors operating in and across the African continent. ASR has offices in the U.K. and Mauritius and a presence in Kenya, and we intend to continue to scale our business by establishing hubs in other African countries, notably in Nigeria, Morocco, South Africa and Ivory Coast.

What informs your interest in Nigeria?

First of all, our team is nearly all Africans with people born in Africa or who have lived in Africa for many years and have deep belief and feelings in Africa. And the most important thing to understand is that to thrive in Africa and to provide appropriate risks mitigation, you really need to understand the underlying dynamic of each country. Each country is different and we have people who are constantly researching and are on the ground, therefore understanding the different dynamics, as a result they are able to tailor the risk mitigation solutions to suit those instances.

We are all about trying to increase the level of infrastructure development and inward investment into Africa through risk mitigation insurance

From your research, how deep is this risk mitigation market in Nigeria?

I think it is pretty developed but I think there is a lot of scope for improvement in insurance penetration. There remains a lot of uninsured risks as well.

Is there any specific expertise that is required to provide the continent with best class service?

It is really important to have deeper understanding of local and regional issues. Our expertise actually predates the launch of our business, noting that all ASR management are either African or have worked in Africa for decades as well as across the London insurance and reinsurance market. We have a great team of people who really understand the continent and truly understand the regional nuances.

What gives you confidence of penetrating the market, knowing fully well that there are other companies who offer the same service?

First thing is that we don’t see other companies as competitors, we are actually partners instead. Many transactions are very large, hence the risk exposure is co-insured by many insurers and reinsurers. We believe that our ability to make bespoke solutions will give us the edge. Our underwriting capability and deep African experience will be a value add to Nigeria.

So, who are your partners in executing your job in Nigeria?

In Nigeria, we actually have relationships with all the major brokers and the other operators in the system. We also provide training opportunities and training workshops for various companies. We recently provided training in partnership with Continental Re, where Genevieve Ahinful, Head of Political Risk Insurance and Trade Credit Underwriting, led the session and hundreds of people attended the Zoom meeting and it was well received. We are engaging and helping whoever we can to raise the level of insurance skills not just in Nigeria but wherever it is needed across the Continent. We would like to impart our knowledge from the skills that our team have and that is being widely accepted.

What would you consider as your milestones so far in Africa?

The most important milestones was the launch of a fully capitalised and licensed re-insurer in Mauritius at the end of 2020, and the granting of an insurance manager license by the Financial Service Commission in Mauritius. That enabled us to start underwriting business at the beginning of February 2021. The next most important milestone was the launch of ASR Re Limited in Bermuda, which is our Bermudan reinsurer.

The latter was awarded a long term insurer credit rating of BBB+ with a Stable outlook in its first year of operation. So with that, the group actually offers a range of re-insurance solutions and ASR continues to expand the product and capacity offering across the full spectrum of corporate and specialty reinsurance covers.

From a product perspective, the next milestone was the launch of our parametric line of business which is a very analytical and data driven product using leading edge technology. The protection is based on fixed, retrievable, and easily comparable data meaning the pay-out is clearly defined. It provides a non-conventional way of looking at risks, where ASR can combine protection with other conventional indemnity protections offered by other lines of business in order to provide a complete risk transfer for insureds. Lastly, but not exclusively, we are in our second year of our operation and we have renewed and expanded our binder capacity from our partners demonstrating the confidence they have in us.

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Considering that Nigeria is a big market, why such belated move to deepen your presence here?

It is not belated because actually we are just writing business for over one year. It has always been our plan to open a business development hub in Nigeria. So, Nigeria is very important to us and we are looking forward to the opportunity here. We set up our operations in the UK where most of our underwriters are based and we have a reinsurance and a managing general agent in Mauritius.

However, we are de-risking investments into and across Africa and we wrote business across 44 African countries in the first 12 months of our operation. We also participated in the de-risking of investments across Africa of up to $3.4 billion through our political risk insurance and trade credit division, that includes Nigeria. So we are not new in Nigeria, even though we don’t have a physical presence, but we have de-risked investments into and across the country. Insurance gives investors and businesses the confidence to invest in projects in Africa and enables those projects to proceed in a timely manner. This creates economic activity, jobs and ultimately alleviates poverty. We are all about trying to increase the level of infrastructure development and inward investment into Africa through risk mitigation insurance.

Which sectors does ASR focus on?

We have nine lines of business and these insurance covers appeal to a large group of companies operating across a wide range of industries, from local to international financial institutions, telecommunications, hospitality, trading companies, mining, renewables, manufacturers, agriculture to civil infrastructure projects, amongst others. From a starting point, our Political Risk Insurance and Trade Credit covers can provide international and intra-regional investors with the confidence to provide critical investment flows. We also provide a comprehensive suite of covers to protect businesses throughout their entire operating life cycle. We have African knowledge and insurance expertise, and this enables us to underwrite the risks which others have shied away from.

Would you say outside investors have exaggerated perception of risks in Africa?

We can consider that the perception of risk on the African continent is undergoing a very important change. About ten years ago, we had a rather closed view of the possibility of investment on the African continent, very often focused on the oil or mining industry. Today, we have entered a phase with investments addressing a myriad of sectors that will have a long-term impact. This is a sign of maturity with, of course, disparities between countries. This is significant because it shows that the industrial fabric is gradually being built up.