CUSTODIAN, RATED BY A. M. BEST

A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of B (Fair) and issuer credit rating of "BB" of Custodian and AlliedInsurance Plc. The outlook assigned to both ratings is stable.

The rating affirmations reflect A.M. Best’s expectation that Custodian’s risk–adjusted capitalization will continue to remain supportive of its current rating level. Additionally, the company’s competitive profile and operating performance are expected to remain solid. 

Custodian’s risk–adjusted capitalization is expected to remain at a strong level and going forward, A.M. Best expects the company’s risk–adjusted capitalization to be supported by the robust earnings of the Group.

Prospective operating performance is expected to remain solid. The Custodian Group announced profit before tax of=N=2.5billion for the unaudited third quarter ended 30 September 2013. This indicates an increase of 89.5 per cent over the =N=1.3 billion recorded in the corresponding period of 2012. Profit after tax increased by the same proportion from =N=1.14 billion to =N=2.1 billion, while the Group’s asset base increased from =N=40.9 billion to =N=47.2 billion, indicating 15.3 per cent growth within a nine–month period. The gross written premium was =N=19.8 billion from =N=9.4 billion.

Commenting on the ratings, the Managing Director, Custodian and Allied Insurance, Mr. Wole Oshin said "This is a welcome development. A. M. Best is the world leader in Insurance Ratings, and we are pleased with the stable outlook given the company. We will continue to address our operations to benchmark against the best in the world, with the view to improve this performance in the near future." 

Custodian and Allied Insurance Plc is quoted on The Nigerian Stock Exchange (NSE), and is approved by the regulatory bodies in Nigeria to offer insurance services, and provide services that extend beyond national frontiers

ROYAL EXCHANGE EARNS N9B INCOME

Royal Exchange Plc generated a gross premium income of N9.08 billion in 2013 in comparison with N7.61 billion recorded in 2012, representing a growth of 19 per cent, the Group Chairman, Kenneth Odogwu, has said.

While addressing shareholders during the company’s 45th Annual General Meeting in Lagos recently, Odogwu said that the total claims settled in 2013 amounted to N2.48 billion as against N1.63 billion reported in 2012, signaling an increase of 52 per cent.

He also stated that the underwriting expenses increased by 3 per cent from N2.13 billion in 2012 to N2.20 billion in 2013, adding that these translated into net income before overhead expenses of N3.40 billion, as against N2.67 billion in 2012.

According to him, the group achieved a profit before taxation of N828 million, 18 per cent higher than the N708 million recorded in 2012, while the profit after taxation increased by 41 per cent from N573 million in 2012 to N806 million in 2013.

Odogwu stated the company’s management expenses rose to N2.53 billion in 2013 from N1.98 billion in 2012. He attributed the rise to branch expansion, retail business development and investments in e-business and information technology.

Considering the impressive results achieved by the organisation during the outgone year, a dividend of 5 kobo per 50 kobo share which was recommended by the company’s board of directors was approved by the shareholders at the yearly meeting.

The Royal Exchange boss also disclosed that the company was working out measures to raise its capital to enable it improve performance.

Odogwu assured that Royal Exchange is bracing up to take advantage of identified opportunities in the economy so as to grow its market share.

He maintained “our three year transformation plan is on course and has contributed immensely in strengthening our performance parameters, developing our retail businesses, reinforcing our asset management franchise and aligning our shared-services objectives.”

CONERSTONE GETS NOD TO ACQUIRE FIN INSURANCE

The shareholders of Cornerstone Insurance Plc have authorised the board to acquire 3.3 billion ordinary shares of Fin Insurance Company Limited, which will make Cornerstone a sole owner of the insurance entity.

The resolution to this effect was unanimously passed by the shareholders during the 22nd Annual General Meeting of the company in Lagos recently.

Cornerstone Group Chairman, Adedotun Sulaiman, said the company believes strongly that the Nigerian insurance industry remains fragmented and there continues to be a need for consolidation of the industry to fast track building scale and capacity.

Sulaiman stated that “in addition to providing a significant boost in the balance sheet size of the enlarged Cornerstone, our partner, Fin Insurance Company Limited, creates complimentary values in such areas as distribution channels, geographical spread and product opportunities, among others.”

According to him, the company continues to make strides in the execution of its five year strategic plan particularly in the area of retail distribution and Islamic insurance using its Takaful window. “We are achieving this by forming value-adding and innovative partnerships and alliances across different sectors.”

The analysis of the financial statement presented at the yearly meeting showed that the company grew its Gross Premium by 15 per cent from N4.6 billion in 2012 to N5.3 billion in 2013. However, the company’s underwriting result decreased by 30 per cent from N1.2 billion in 2012 to N866 million in 2013. This was due to a 15 per cent increase in reinsurance expenses which grew from N1.6 billion in 2012 to N1.9 billion in 2013 and net claim expenses that went up by 18 per cent from N985 million in 2012 to N1.1 billion in 2013.

Its profit after tax increased from N544 million in 2012 to N870 million in 2013, while its total asset grew by 16 per cent from N12 billion to N14 billion during the same period under review.

Commenting, the Group Managing Director, Ganiyu Musa stated that “Cornerstone Insurance Plc will continue to build on the strength of the Cornerstone people and the commitment to her core values including strong ethics and innovation to make Cornerstone the insurance of choice in Nigeria”.

By Sola Alabadan

NIA NEEDS TO STANDARDISE MOTOR INSURANCE RATES

As motor insurance contributes about 26 per cent of the insurance industry’s gross premium, the Nigerian Insurers Association (NIA) is working to standardise the premium rates being charged on motor insurance business in order to curb rate cutting and boost profitability. NIA’s Director General, Sunday Thomas, said some insurance companies engage in the unethical practice of rate cutting due to the cut throat competition in the industry as these insurance companies strive to gain undue advantage over other competitors. He noted that that the standardisation of motor insurance rates was not intended to compel all insurers to charge the same rate, but to ensure that the insurance firms do not charge rates that are below the market approved rates. He said “We are trying to standardise the rating of motor insurance. We believe the business of motor insurance should not be rated below certain level. This will improve the balance sheets of underwriting firms.” Thomas added that the initiative would also be extended to group life insurance business in due course to ensure that the business is profitable. He stated that rate cutting in insurance sector was worrisome, pointing out that most of the insurance firms that engage in rate cutting are unable to meet their obligations when the need to pay claim arises, thereby worsening the already battered image of the industry. After realising that the market agreement voluntarily signed by all insurance companies in 2009 was not yielding expected results as some insurers were not adhering strictly to the provisions of the agreement, the NIA commenced moves to sanction insurers who charge premium rates that are below the market approved rates. To this end, the association set up a rating committee to determine minimum rates in respect of motor, group life, industrial all risk, money and fidelity guarantee for banks. The rating committee under the chairmanship of Managing Director, Sovereign Trust Insurance Plc, Wale Onaolapo, was also mandated to recommend sanctions for non-compliance with the minimum rates. The market agreement was developed as a code of practice on effective service delivery including adequate rating and prompt settlement of claims by the insurance firms. However, the agreement suffered setback as some insurers engaged in the unethical practice of rate cutting due to cutthroat competition.

By Sola Alabadan

Remi Olowude, IGI boss, Passes On At 63

The Nigerian insurance industry  lost an icon when the Executive Vice Chairman, Industrial and General Insurance Plc, Mr. Remi Olowude, passed on in a hospital in the United State of America after a prolonged illness.

Born in 1951, Olowude, before his demise, was the chairman of the Nigerian Insurers Association (NIA), an umbrella body for all insurance companies in Nigeria from June 2012 to June 2014. He was also the chairman of National Insurance Corporation Limited, a publicly quoted company in Uganda; a director and co-chairman on the Board of SONARWA Holdings, which owns separate life and general insurance companies in Rwanda; held board memberships in Industrial & General Insurance Plc,   Global Trust Savings and Loans Limited, IHMS, among others.

Mr Olowude had Bachelor of Science degree in Quantitative Economics from the University of Lagos from 1970 to 1973, after which he proceeded to the University of Santa Clara, California, United States, in 1976 for his Master of Science degree in Applied Economics and had completed the coursework for the award of a doctorate degree from the University of Santa Clara, California, USA.
He deployed his international business expertise, professionalism and vision to build a conglomerate with interests in various business sectors.

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He was awarded the national honour of Member of the Order of the Niger of The Federal Republic of Nigeria, for his exemplary service inthe country.

May his gentle soul rest in peace.