allAfrica.com: Nigeria: 30 Years Re - Should the Dream Die? (Page 1 of 1)

Nigeria Reinsurance Corporation was set up in 1977 vis a decree. It started operations in January 1978 as a fully owned government company. Its mandate was simple: Increase in the local retention capacity of the insurance market and decrease in outflow of insurance premium.

To achieve those, the law backed it with 20 per cent mandatory cession or what came to be known as legal cession by all existing local primary underwriting companies. In addition, it had the right of first refusal in all primary insurers' excess capacity reinsurance overseas.

Legal cession meant that 20 per cent of insurance com-panies gross premium was paid to Nigeria Re, at least, where the premiums are deemed to have been collected by the insurer. Altogether, the company, as a startup, was given advantage to succeed from day one.

However, the legal merits did not translate to overall success in terms of playing significantly in the international market. Instead, it conferred on it a dependency status. About 90 per cent of its earnings came from the operations of primary insurers. This resulted in frequent quarrels between it and insurers over payment and non payment issues. It was either the companies were owing premiums due to Nigeria Re or the reinsurer refused to pay claims.

Till today, a proper reconci-liation of the debt profile due from insurance companies has not been done nor has it been written off in the reinsurer's books. The disagreement of those years of legal cession came to full play after privatisation. After privatisa-tion, the trade group for reinsurers asked its members not to release cessions due to Nigeria Re, even before privatisation. The company was weakened and nearly collapsed. But that is the result of dependency.

Sour Board/Management relations But, all that may be in the past now. Or, is it? In all the years since inception, the management of the reinsurer have had to contend with one ugly scepter of its statutory and strategic position; the fact that appointments to its board by government are always based purely on political consideration and the miscon-ception by the appointees that it is reward for their loyalty to the government at that time.

So, for them, premium means income and it should be shared among the directors. From Professor Joe Irukwu, the pioneer CEO, the problem had remained till today. It is an ugly aspect of the reinsurer's problems that has, in one way, affected its growth.

Irukwu, himself, an avowed professional, fought his chairman relentlessly until all operations was stalled. "The board became a political board," Irukwu commented at that time. "It affected the company's business because, for three years, we did nothing else except write petitions.

At meetings, we were not interested in the company but only in contracts and settling disputes arising from con-tracts," Irukwu recalled of the period in Reinsurance In Nigeria, a 20th year publication of the company's establishment.

Chief Moshood Odele did not fare better. He was pitched in a relentless battle to save the company from politicians who were appointed on the board.

The sketch above shows clearly that while government did set up a reinsurer to compete globally, the environ-ment marred the full realisation of the dream. However, it did succeed in part, if considered from the point that the market it served was no less successful as the reinsurer was at that time. It recorded good results in manpower development.

Till today, the best trained technicians and reinsurance administrators are to be found in the company. It has achieved results in risk surveys and, today, has the highest concen-tration of skilled manpower in this field. There are numerous areas it had impacted the insurance industry through training and deploying expertise in risk assessment for insurers and monitoring outflow of resources overseas.

Sometimes, it had brought sanity in the market by asking questions about some rates charged by underwriters. It is as useful today as it was in its days of an industry watchdog.

Government can make a difference: The Nigerian government is still the single largest shareholder in Nigeria Re. The Reinsurance Acquisition Group, a management buy-out vehicle during privatisation, emerged the core investor.

But the Group is no more than institutional investors who have since asserted their positions in the company. Of all these, the Jigawa State government owned 25 percent of the split shareholdings. But that shareholding is now owned by Jimoh Ibrahim, who bought it off the Jigawa government when it defaulted on a Union Bank loan it used to buy the shares.

Nigeria Re has all the trappings of a great company. In this era of local content, it can be transformed into a national player with a global outlook. It has the mechanism to achieve the same objectives it set out with in 1978. There is no other reinsurer locally that can still help to reduce capital flight. France national reinsurance company operates profitably like any other company.

The federal government should still retain the 49 percent equity and recapitalise it. Then other private investors can take a cue. But they must appoint people with insurance knowledge to the board. Nigeria Re, even as a public-private sector partnership, can still work to achieve a national goal. But, should the present crop of professionals still remaining in the company leave, then this national monument will become history.

web allafrica.com	Enter your search terms	Submit search form
OR subscribers use AllAfrica's premium search engine


Use our pull-down menus to find more stories

Today's Most Active Stories