Massive mergers loom in insurance sector

… As Prudential acquires major stake in Zenith Life

Drastic actions are being considered to be taken against the “no-serious insurance companies”, which might result in further mergers and acquisitions as witnessed at the post-2003 insurance reform.

This revelation is coming on the heels of recent findings which indicate that the insurance sector accounted for 40-42 per cent of dormant equities on the Nigerian Stock Exchange (NSE) in the first quarter of 2017.

Dormant equities are stocks that recorded no price movement but remain static at their nominal value of 50 kobo per share.

Giving this assertion in Lagos recently, was the Head of Retail Non-Life at AIICO Insurance, Taofik Ayeni, during a training rganized for members of the Capital Market Correspondents Association of Nigeria, CAMCAN as part of the association’s capacity building initiatives to enhance members’ skill in financial market reporting through knowledge of industry-specific operations.

Confirming the development was the Chief Executive Officer (CEO), Nigerian Stock Exchange, Oscar Onyema, who at a recent interactive session with insurance industry leaders, lambasted insurance companies for their apathy towards corporate governance culture.

Onyema said there was high level of regulatory infraction in the industry and that insurance records the highest penalty among the segments of The Exchange.

The NSE CEO disclosed that only 12 out of 27 listed insurance companies are post-listing compliant in terms of corporate disclosure, mainly filing of annual reports.

Although reports reveal that Nigeria is among the least countries in terms of insurance contribution to the Gross Domestic Product, GDP, at 0.72 per cent, The Director-General of the National Insurance Commission, NAICOM, Sunday Thomas, attributed this to “general apathy for insurance by the Nigerian government and the citizens”.

Thomas said the Nigerian insurance sector was grossly untapped because it had not yet appealed to the informal sector, which constitutes over 80 percent of the population, adding that it would take deliberate efforts to win the confidence of this sector.

The apex regulator had thus introduced a number of strategies towards achieving the objectives of a Compulsory Insurance Scheme (CIS). One of the strategies was the Market Development and Restructuring Initiative (MDRI) – a medium-term plan, aimed at facilitating the enforcement of the Compulsory Insurance.

Fortunately, a welcome development in this regard has been activated by the Lagos state government through its enforcement of the CIS in its territory to mitigate risks resulting from the violation of insurance regulations in various sectors.

Meanwhile, the News Agency of Nigeria reports that Prudential Life Insurance, a leading life insurance company in the world, has acquired majority stake in Zenith Life Insurance company in Nigeria.

According to the agency, a source in Zenith Life Insurance, on Thursday said that the deal was consummated in July.

He said that the deal affirmed Prudential’s commitment to Africa after its launch of businesses in Ghana and Kenya in 2014, Uganda in 2015 and Zambia in 2016.The source said that Zenith International Insurance just introduced its new majority shareholder to the Nigerian Council of Registered Insurance brokers at a members’ evening in Lagos.

At the meeting, Mr Chuks Ingumbor, the Managing Director of Zenith Life, was quoted as saying that his company was proud to be a member of Prudential Group.

“Zenith Life is proud to be part of an international brand and is looking to deepen Insurance penetration in Nigeria by continuing its existing relationship with the broker community, while also launching its retail proposition.”

Mr Okunoren, the NCRIB President, commended Zenith Life for its level of level of service it had displayed in its dealings with brokers and look forward to working with a stronger entity.

Zenith Life was incorporated in 2001 and had N6.6 billion assets and a gross premium of N3.3 billion as at December 2016.

Prudential PLC and its affiliated companies constitute one of the world’s leading financial services group with 2.4 million Insurance customers with 599 billion pounds of assets. It was founded in London in 1848.

Afolabi Adesola