Thursday, 31 July 2014

Pension agents recover over N500m

PenCom's logo
Chuks Udo Okonta

The efforts of agents engaged by the National Pension Commission (PenCom) to recover unpaid contributions seem to be yielding results as over N500 million has so far been retrieved from defaulters, Inspen has learnt.
Executive Director, Andax- Patrick Limited Patrick Igboh, who his firm is one of the agents disclosed this today on a television programme – Focus Nigeria, anchored by Africa Independent Television (AIT).

He said the amount recovered was for both outstanding pension contributions and interest penalty from employers in the private sector, who did not remit as when due or did not remit at all. He added that the period covered was from January 2005 to December 2012.
Echoing him, Business Development and Relationship Management, FUG Pensions Limited, Godswill Egbe, said the efforts of the agents have started reflecting on the books of pension fund administrators.

He noted that there was an account in his firm that moved from zero to over 98 per cent, attributing the growth to the efforts by the agents.

The new Act which was recently signed by the President Goodluck Jonathan, in Section 11 subsection 3b, provides that an employer shall not later than 7 working days from the day the employee is paid his salary, remit an amount comprising the employee’s and employer contributions to the pension fund custodian specified by the pension fund administrator.

Section 11 (6) provides that: “An employer who fails to deduct or remit the contributions within the time stipulated in subsection (3) (b) of this section shall, in addition to making the remittance already due, be liable to a penalty to be stipulated by the commission.”
PenCom has stated that 50 per cent of the interest penalty from outstanding contributions recovered through the efforts of agents will be given to employees with Retirement Savings Account (RSA), while the balance 50 per cent would be use to settle the agents.

The commission said the balance 50 per cent would be paid to agent to defray the cost of recovery, adding that PFAs would not be allowed to charge administration fee on retirement savings accounts that benefited from the recovery in the arrears or in retrospect.

 It noted that each agent’s performance would be monitored based on set performance standards which would be documented in a Service Level Agreement (SLA) to be executed with the recovery agents. He said recovery agents would be required to submit monthly progress report with respect to recoveries from employers assigned to them, adding the reports would be reviewed to determine if the performance of the agent is satisfactory or otherwise.

Delays at airports see surge in flight insurance

Numerous flights were delayed at Hangzhou Xiaoshan International Airport on July 26. [Photo/CFP]

By Wang Wen

Travel agencies have reported brisk sales of flight-delay insurance policies in the past two weeks, especially on routes in the eastern and central parts of China, as a result of an increasing number of flight delays. International Ltd said on Wednesday that its sales of such policies rose 90 percent this month compared with the first two months of the year. The company is the largest online travel agency in China.

About 26 percent of the customers of Tongcheng Network Technology Share Co Ltd, an online travel agency based in Suzhou, Jiangsu province, bought flight-delay insurance in recent weeks, compared with 20 percent previously, said Zhang Yanhong, public relations manager of Tongcheng Network.

The policies cost 20 yuan ($3.20) and pay 100 yuan if a flight is delayed for at least four hours, Zhang said.

The Civil Aviation Administration of China issued alerts on Saturday and Monday concerning flight delays. The CAAC also noted that air traffic at the two airports in Shanghai was down by 75 percent on Tuesday from its usual level.

"Our customers often bought aviation accident insurance in the past, but now, most of them also buy flight-delay policies," said Yan Xin, a senior manager of Ctrip’s public affairs department. Under civil aviation regulations, airlines do not usually have to compensate passengers for delays caused by weather or traffic controls.

"At the moment, insurance may be the most effective way for passengers to cover some of their losses," Yan said.

Some passengers traveling on the affected air routes said the insurance is becoming a necessity.

Source: China Daily

Power Plant Bombed In Gaza Is Insured By U.S. Government

Flames engulf the fuel tanks of the only power plant supplying electricity to Gaza after it was hit by overnight Israeli shelling, on July 29, 2014. (Photo: Mahmud Hams/AFP/Getty Images)

By Christina Wilkie

As lawmakers on Capitol Hill scrambled to approve increased military funding for Israel this week, a little-noted federal agency across town prepared to spend as much as $84 million to compensate an American company for losses sustained in the Israeli bombardment of a Gaza power plant.

The money would come from the Overseas Private Investment Corporation, which helps U.S. companies expand business abroad in ways that, to quote OPIC's website, "help solve critical development challenges and in doing so, [it] advances U.S. foreign policy." The agency does all this in part by offering insurance policies designed to protect companies from political risk, a broad term that includes "war, civil strife, coups," and "terrorism."

An OPIC spokesman told The Huffington Post on Tuesday that a "U.S. investor in the power plant whose investment is covered by OPIC political risk insurance ... notified OPIC that the facility in question has been damaged."

That investor is likely Morganti Development LLC, a Delaware-based corporation that owns a stake in the only power plant in the Gaza Strip. As of Wednesday, OPIC said the company had yet to file a claim for the losses.

The Huffington Post was not able to contact Morganti Development LLC directly, and a representative for Morganti Group Inc., an affiliated company, did not respond to a request for comment.

The potential Gaza insurance claim highlights the costliness of U.S. foreign policy. First, the United States sends more military funding to Israel than to any other country. That kind of aid makes it possible for the Israel Defense Forces to conduct its highly sophisticated -- and some say overly brutal -- campaign in Gaza. Ultimately, paying for the results of that operation will also partly fall on the U.S. government.

The Obama administration is already working to rebuild Gaza and restore the region to a pre-war state, starting with a $47 million humanitarian aid package and more likely to come. The destruction of the power plant could produce a second wave of costs to be borne by U.S. taxpayers.

Complicating matters is the fact that Hamas continues to fire rockets into Israel, and Hamas leaders have repeatedly pledged to keep up those attacks until Israel and the international community lift the blockade currently imposed on Gaza. In Washington, most of the recent funding proposals have been aimed at bolstering Israel's "Iron Dome" missile defense shield, which has neutralized hundreds of missiles fired from Gaza in the past month.

As part of Israel's response to that rocket fire, the Gaza power plant was bombed on Monday, the flames and smoke visible for miles. Amnesty International argued that the bombing amounted to a "collective punishment of Palestinians."

The power plant had been bombed for the first time in 2006, during a similar wave of fighting between Israel and Hamas. At that time, Israel stepped in to help supply civilians in Gaza with power, but only after the United States and Great Britain applied diplomatic pressure. The OPIC spokesman told HuffPost that, despite media reports to the contrary, Morganti did not file a claim for the 2006 damage.

Morganti is part of the global construction empire of Palestinian billionaire Said Khoury, a prominent philanthropist whose Consolidated Contractors Company is the largest builder in the Middle East. Morganti Group has been a subsidiary of CCC since 1988. Khoury partnered with the energy conglomerate Enron in 1999 to build the Gaza power plant, an unprecedented project for Gaza and one supported by then-President Bill Clinton. When Enron dissolved in 2002, Khoury acquired its shares in the plant and holds them through Morganti Development.

The OPIC insurance policy for the Gaza power plant was issued in 2004 and has been maintained since then.

Source: HuffPost

Marsh profits jump 11% for Q2

Global broker delivers second quarter revenues of $3.3bn.

By Emmanuel Kenning

Marsh & McLennan Companies has reported revenues of $3.3bn [£1.95bn] and an 11% increase in profit to $431m (Q2 2013: $388m) for the second quarter of 2014.

The broking giant detailed that risk and insurance services revenue was $1.79bn in the second quarter of 2014, again a rise on the $1.69bn achieved in Q2 2013.

Operating income in the division rose 6% to $448m for the three months.

Within this arm of the company, Marsh's revenue in the second quarter of 2014 was $1.49bn, up from $1.4bn in the same quarter of the year before.

And in turn within Marsh, revenue from the Europe, Middle East and Africa unit came in at $478m (Q2 2013: $455m).

This represented a 5% increase on the same quarter the previous year. However the company noted that underlying revenue strengthening was in fact only 1% after stripping out the impact of and acquisitions and disposals.

President and CEO at Marsh & McLennan Companies, Dan Glaser, said: "The company delivered another quarter of excellent financial results.

"We produced revenue growth of 7% with underlying revenue growth of 5%. This was our strongest quarterly revenue performance in two years, with all operating companies contributing."

Source: Insurance Age

The FTSE 100′s hottest dividend picks: Old Mutual Plc

By Royston Wild

Today I am looking at why I consider Old Mutual (LSE: OML) to be an attractive dividend selection.

Dividends poised to stride higher

Even though earnings have slipped in three of the past five years, life insurance giant Old Mutual has remained a popular pick with income seekers, the firm having lifted the annual dividend at an eye-watering compound annual growth rate of 52% since 2009.

Payment growth has become a lot more 'civilised' in recent years, so to speak, with the full-year dividend rising just 14% in 2013 to 8p per share.

And City analysts see further weighty payment rises on the horizon, with a 9% advance pencilled in for 2014, to 8.7p, despite another (albeit fractional) earnings fall during the period. A solid 11% earnings improvement chalked in for 2015 is expected to undergird a stronger 13% dividend rise to 9.8p per share.

The dividend forecast for 2014 produces a weighty yield of 4.3%, making mincemeat of a prospective average of 3.2% for the FTSE 100 although falling slightly short of a corresponding readout of 4.6% for the entire life insurance sector. But 2015′s expected increase blasts Old Mutual's yield to a stunning 4.9%.

Emerging market exposure bolsters dividend outlook

Meanwhile, dividend coverage through to the end of next year should boost investor confidence in the likelihood of such bumper payouts. Indeed, dividend forecasts for this year and next boast are covered by 2.1 times predicted earnings, above the generally-regarded security territory of 2 times.

And with an extensive exposure to emerging markets, Old Mutual is well positioned to benefit from the low penetration rates of insurance products and rising disposable income levels in these regions. Almost four-fifths of the firm's funds under management (or FUMs) are held in South Africa, and the company saw total FUMs in the country leap 12% as of the end of March from the corresponding point in 2013, to 671.7bn Rand.

The firm also has solid exposure to Asia, Latin America and other parts of Africa, and reported that total developing region gross sales rose 18% during January-March. And the firm is investing heavily in these geographies to latch onto rising revenues opportunities, including the acquisition of Ghana's Provident Life and Kenya's Faulu in recent times.

With Old Mutual pulling up trees in these exciting regions, I believe that dividend seekers can look forward to strong payout growth in coming years in line with robust earnings expansion.

Turbocharge your stocks portfolio with the Fool

But whether or not you like the look of Old Mutual as a possible dividend stock, I would strongly urge you to check out the Fool's latest wealth report which highlights how you can make a packet from investing in the best income stocks around.

This ALL NEW and EXCLUSIVE report, titled "How To Create Dividends For Life," lays out the golden rules on what to do -- and what not to do -- when loading up on dividend-paying shares. Click here now to download your copy; it's 100% free and comes with no further obligation.

Royston Wild has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned.




South African insurer opens doors


South African insurer Youi has started selling house, contents and car cover over the internet in New Zealand.

Youi received its licence to sell insurance here on Monday, and quietly began issuing policies yesterday, but today marks the official the start of its attempt to win a share of what is one of the world's most concentrated general insurance markets.

The New Zealand insurance market is dominated by the Australian-owned IAG group, which owns the NZI, State and AMI brands, and fellow Australian giant Vero, which also majority owns AA Insurance.

The ratio of claims paid to premiums gathered for house and contents insurance, excluding natural disaster cover, and car cover, have fallen over the past five years, according to figures from the Insurance Council.

This indicates competition is not driving prices down.

Youi's chief executive Danie Matthee indicated Youi, which the company says stands for "You. Insured", would be competing on price.

Many Kiwis were "paying too much" for their cover, Matthee said.

"We're all about tailored products, priced very competitively and accurately, because we don't make assumptions about what our clients need - we ask relevant questions to really understand our clients better so that we can offer a competitive price."

To promote public transparency, policyholders could share their experiences using "The Youi Wall" online message board.

Youi has made significant inroads into the Australian market since it launched there in 2008, and now claims to be the fastest growing car and home insurer across the Tasman. It has had a new Zealand presence for over a year, with a call centre in Auckland servicing customers in Australia.

It's now a sizeable employer with over 280 staff in New Zealand, which it says will rise to over 420 by April next year.

Source Stuff

Wednesday, 30 July 2014

Leadway, Custodian, AIICO leads in N175bn premium generation

By Modestus Anaesoronye

Twenty-two of the 59 insurance companies that have received the National Insurance Commission’s (NAICOM’s) approval for their 2013 financial accounts have generated about N175bn premium, with Leadway Assurance, Custodian & Allied Insurance and Aiico Insurance leading the pack. While another 20 insurance companies were at different levels of getting approval having submitted their accounts, 17 others were yet to submit as at July 25, 2014, even as they have run behind deadline of June 30 given by the industry regulator for submission of annual returns to NAICOM.

Analysis of the figures released by NAICOM shows that for the financial year ended December 31, 2013 Leadway recorded a premium income of N41.75bn, Custodian & Allied N22.95bn and AIICO Insurance N22.83bn.

Others are Continental Reinsurance N13.85bn, Mansard Insurance N13.58bn, Niger Insurance N10.44bn, Royal Exchange N8.87bn and Sovereign Trust Insurance N8.67bn.

For the second quarter 2014, that analysis shows that 10 out of the 59 underwriting firms have submitted their second quarter financial to the Commission.

It reveals that ARM (Crystalife) Life Insurance posted N585.61m in the; Equity Assurance N1.5bn; Fin Insurance N222.45m; Guinea Insurance; N294.85 million; KBL (PHB) Insurance N799.81m and Linkage Assurance N1.7bn.

Others are Mutual Benefit Assurance N4.37bn; Old Mutual Nigeria Life Assurance N594.60m; Wapic Life Assurance N372.55m and Wapic Insurance N1.7bn.

For the 17 companies that were yet to submit their annual returns on or before the deadline of June 30, they would be expected to pay N5,000 fine to the National Insurance Commission for each day that passes until they submit.

The Accounting Technical Committee (ATC) of the Nigerian Insurers Association (NIA) recently offered steps that could enable insurance companies meet the deadline for the submission of their accounts to the regulator. The 10-point recommendation which was stated in the NIA Annual Report is coming at a time when most operators are struggling to meet the deadline for submission of annual returns to the industry regulators.

The committee called on operators to institute periodic audit, which should be done quarterly or bi-annually to reduce the stress encountered in preparing for the end of year audit.

They also called for investment on computer software/hardware and integration of all branches, stressing that the software should be International Financial Reporting Standard (IFRS) complaint.

Other steps are that companies should carry out human capital development to address knowledge gap; documentation process should be computerised by acquiring robust software for data capture; there should be early closure of financial transaction with year-end cutoff date to facilitate timely reconciliation and production of annual accounts; aligning financial year of subsidiaries with parent company; work towards achieving timeline for submission of financial statements; engage the same auditing firm for their local and foreign subsidiaries and more qualified personnel should be deployed to the financial reporting process.

Source BusinessDay

New ECOWAS brown card to be operational in Jan 2015

The Nigerian Insurers Association (NIA) has said the implementation of the new Brown Card for Economic Community of West African States (ECOWAS) would take off on 1 January 2015.

The NIA Director-General, Olorundare Thomas, told NAN in Lagos that the aim was to eradicate fake cards. The card is a creation of the ECOWAS protocol to facilitate transportation within the West Africa sub-region.

It helps in claim payments by insurance companies to motorists involved in accidents. "The sub-regional Secretariat in Lome, Togo, had standardised the operations of the scheme with the design of a new consensual card.

"The secretariat is also designing an online claim management software that will reduce the time for claims processing," Thomas said.

The director-general said that the need to review the protocol in line with current realities was among the challenges confronting the ECOWAS card scheme.

He said that the Nigerian National Bureau had continued to face challenges of delay in payment of cross border claims management.

Thomas said that other challenges faced by the bureau, included issues with the police formation of some member countries to get motorists released on time.

According to him, this happens when accidents involves accidents with loss of life.

Source PM News

CONFAB Tasked On Policy to Grow Insurance

Nigerian insurance operators have charged delegates at the National Conference holding in Abuja to recommend that the government should show more commitment to the policy that can positively transform the insurance sector as an agent of national economic growth.

The insurance industry's position was contained in a memorandum to the national conference by the Nigerian Insurers Association in collaboration with the Chartered Insurance Institute of Nigeria, Nigerian Council of Registered Insurance Brokers and Institute of Loss Adjusters of Nigeria.

In spite of the opportunities and potentials that abound in the insurance industry, the insurance operators have always pointed out that there are also daunting challenges which continue to stifle growth in the sector.

While lamenting that these obstacles have been responsible for the abysmally poor contribution of the insurance industry to the nation's Gross Domestic Product, the insurers added that this has made insurance to be relegated to the back seat in the scheme of national discourse.

The insurers also regretted that the industry was not deemed worthy of representation at the conference.

To make the industry occupy its rightful position in the economy, insurers said it is imperative to dust up the laws governing insurance business operations, many of which have become obsolete and completely out of tune with the prevailing circumstances.

The insurance operators emphasised that this step has to be taken so that the industry will not continue to bear the brunt of inappropriate legislations.

Source Daily Independent

RM Insurance to Rebrand to Old Mutual

RM Insurance is set to be rebranded to Old Mutual Zimbabwe as part of a strategy to align its subsidiaries to the main Old Mutual brand, The Herald Business has leant.

Old Mutual group's short term insurance business, RM Insurance Company rebranding will be unveiled to the market in the next few days.

RM Insurance, the country's leading short term insurance company, insures commercial and industrial businesses, construction and civil engineering works, vehicles, dwelling houses and personal possessions.

It provides insurance solutions to the insuring public, commercial, industrial and corporate entities.

The rebranding process has already seen the introduction of a new corporate identity for its banking arm, CABS.

CABS managing director Kevin Terry last week said the rebranding was influenced by a market survey which revealed that the CABS brand was "old and tired".

" . . . it has been like a black jack in your sock - niggling away.

But the time has come. And so now we have a new brand . . . and soon a new look to our branches Chisipite will roll out in September," said Mr Terry.

The unveiling of the new brand will be done in phases. This will include a new uniform for staff and refurbishments of the bank's branches.

The Chisipite branch will be the first to be rolled out with the new look in September.

Source The Herald

Jubilee CEO Appointed to Insurance Network

Jubilee Insurance Kenya's chief executive Patrick Tumbo has been appointed to the board of directors of GLOBUS Network, a network of 33 African Insurance companies.

Founded in 2007, the aim of Globus is to respond to needs of international clients within Anglophone, Francophone and Lusophone countries.

The pan-African network offers comprehensive insurance in Africa with multilingual font and harmonized ratings. The Network is set to benefit from Mr. Tumbo's vast experience in the Insurance Industry acquired over the last 25 years.

Globus is currently present in 26 countries across Africa, including Kenya, Benin, Burkina Faso, Burundi Ghana, Equatorial Guinea, Madagascar, Morocco, Mauritania and Mozambique among others.

The network has been successful in developing business techniques and management related to insurance in the countries where it has membership. Globus Network members benefit from a wide geographical presence, a global approach with a local presence, readily available global expertise and the network's reinsurer Globus Re.

Source The Star

Tuesday, 29 July 2014

ILO, World Bank to Enhance Access to Insurance in Africa and Asia

Linda Eroke

The International Labour Office (ILO) and the World Bank Group (WBG) have signed a memorandum of understanding that aims to provide access to improved insurance products to hundreds of thousands of smallholder farmers, small businesses and individuals in Asia and Africa.
The international labour body said in a statement that the three-year partnership is the first of its kind within the rapidly evolving index insurance industry.
The Facility and GIIF, it added combine their strengths to improve the delivery of index insurance to farmers and their families as well as businesses, through extraction, dissemination and promotion of lessons coming from grantees supported by the GIIF and to strengthen microinsurance markets in countries where GIIF operates.
“The ILO’s Facility is a knowledge hub for inclusive insurance, and we are excited to leverage our expertise in research and capacity building to improve index insurance in collaboration with GIIF.
"With the improved availability of quality insurance, low-income people will increase their resilience to risk, enabling them to adopt improved production processes to help break the poverty cycle of low investment and low returns,“ said Team Leader of the Facility, Craig Churchill.
As part of the partnership, the Facility will bring the GIIF partners into a community of practice that will provide a venue for knowledge sharing and experience exchange.
Publications and interactive events, the ILO explained, will be used to capture and share the latest knowledge of good practices and successful strategies in making index insurance work. To ensure that insurance is valuable for beneficiaries, a series of capacity building interventions and consumer awareness events are also lined up in five countries in Africa and Asia.
“GIIF is pleased to further extend its commitment to the use of index insurance as a prudent and necessary risk management tool for agriculture, food security and disaster risk reduction.
"However, regions where index insurance is particularly relevant in serving as a hedge against climate-related risks – including Sub-Saharan Africa, the Caribbean and Asia Pacific – are in need of accurate data and innovative frameworks to sufficiently address local market conditions,“ GIIF Program Manager, Gilles Galludec said.
“The partnership with the Facility will enable GIIF’s grantees and partners from the private sector to share their knowledge and develop best practices within index insurance. We are confident of identifying innovative index insurance solutions that are practical, effective and financially viable for smallholder farmers, businesses and indivituals, and that will make a lasting impact,“ he added.
The ILO explained that the partnership with the Facility is an important complement to the recent funding support from the Dutch Ministry of Finance to GIIF adding that it is in line with the Facility’s five-year programme of “building quality microinsurance at scale” to accelerate the adoption of good practices by key stakeholders to dramatically expand access to better insurance services.

'Insurance cover for acid attack victims soon’

MUMBAI: Acid attacks victims may soon have help at hand, with an NGO pushing the Centre to frame a comprehensive insurance policy that covers their medical treatment. In addition, a psycho-social-cum-burn rehabilitation centre is being set up by the organization for the victims. 

"Given the speed with which the current government is passing proposals, we are very hopeful of getting the insurance cover for these victims by the end of this year," said Rahul Varma, CEO and managing director, Acid Survivors Foundation, Kolkata. He said this in the sidelines of a campaign announcement in the city on Monday. 

Maharashtra alone has seen around 35 cases of acid attacks, of which 25 have been registered in Mumbai alone in the past three years. More recently, two women from the outskirts of the city were the latest victims of acid attack.
Source Times of India

Lower reinsurance rates, forex loss hit Hiscox H1 earnings

Insurer Hiscox Ltd reported a 31 percent fall in first-half profit as reinsurance rates dropped and it incurred a foreign exchange loss, compared with a year-earlier gain.

Hiscox, which offers insurance on everything from fine art to oil rigs, said pretax profit fell to 124.6 million pounds ($211.6 million) in the six months ended June 30 from 180.7 million pounds a year earlier.

The company recorded a foreign exchange loss of 16.4 million pounds - a sharp reversal from the same period of 2013, when it recorded a currency gain of 34.9 million pounds.

Hiscox said it would pay an interim dividend of 7.5 pence per share, less than many analysts had expected. The company paid an interim dividend 7 pence last year.

Berenberg analyst Tom Carstairs said the market consensus had called for a dividend of 7.86 pence per share.

Hiscox shares fell as much as 1.8 percent.

The Lloyds of London insurer said it would pay out $1 million to $2 million in claims related to the crash of the Malaysia Airlines flight in Ukraine this month.

"Given the recent escalation in tensions in Ukraine, Libya and Nigeria, it is likely that premium rates for conflict or war-related insurance in the market will rise," Hiscox Chief Executive Bronek Masojada told Reuters.

Reinsurance rates continue to decline, mainly reflecting increased competition and fewer catastrophe claims, the company said. Insurance rates are either broadly stable or softening.

Hiscox shares were down 1.14 percent at 694.5 pence at 1035 GMT on the London Stock Exchange. ($1 = 0.5890 British pounds) (Reporting by Richa Naidu and Roshni Menon; Editing by Gopakumar Warrier and Ted Kerr)

Source Reuters

Insurers underwrite 40% of $1bn oil, gas risks

Chuks Udo Okonta

Insurers are presently underwriting only 40 per cent (N64 billion) of the over $1 billion oil and gas risks in the country, leaving a whopping 60 per cent about N96 billion to foreign insurers yearly.

Efforts by underwriters and brokers to revise this ugly trend over the years have not yielded positive results as oil and gas insurance pools proposed to compete with the foreign underwriters were unable to takeoff due to technical hitches.

Chairman Nigerian Insurers Association (NIA) Godwin Wiggle, who is worried about this huge loss to the industry, said Nigeria has the comparative advantage in the production of Oil and Gas, adding that the association under his leadership, will fast track the process of re- establishing the Oil & Gas Insurance Pool so that the industry can reap the full benefit of the Nigerian Local Content Development Act.
Commissioner for insurance Fola Daniel, said  the Nigerian Local Content Development Act,  has moved Insurance companies capacity to underwrite local risks to 40 per cent, the
He noted that prior to the enactment of the law; the industry was underwriting about three per cent of local risks.

Daniel said the law has paved the way for underwriters to engage in special risks, which were ceded abroad in the past

He said insurers are presently doing well in oil and gas risks, adding that tremendous growth has also been recorded on aviation risks.
He stressed that the operators are also careful about the level of their involvement in high profile risks, stressing that they only take a bite of what they can chow.

“The Nigerian insurance sector has great potentials for massive growth. The population, if adequately harnessed, gives an added advantage to the industry to further develop its market,” he said.

GPI: Top 10 insurance companies in first quarter

Chuks Udo Okonta

Things seem to be looking up for some insurance companies in the first quarter as their Gross Premium Income (GPI) has revealed signs of good fortune for this year’s business.

Ten insurance companies that have distinguished themselves by posting large gross premium income in the quarter are, AIICO Insurance Plc, which led the pack with N7.89 billion, it was followed by Leadway Assurance Limited posting N7.70 billion; Custodian and Allied Insurance N4.91 billion; Mansard Insurance Plc N3.48 billion and Niger Insurance Plc N2.68 billion.

Others are Sovereign Trust Insurance Plc N2.57 billion; Africa Alliance Insurance Plc N2.35 billion; NEM Insurance Plc N2.12 billion; Mutual Benefit Assurance Plc N2.01 billion and International Energy Insurance Plc N1.95 billion.

 According the National Insurance Commission (NAICOM), for the firms that have submitted their 2013 accounts, Leadway Assurance Limited raked in the highest premium by posting gross premium income of N41.75 billion. It was followed by AIICO with N22.83 billion; Custodian N20.45 billion; Mansard N13.57 billion; Niger N10.44 billion; Sovereign Trust N8.6 billion; Royal Exchange N6.7 billion; Zenith Insurance N6.4 billion and Cornerstone Insurance N5.3 billion.        


Monday, 28 July 2014

Dublin Chamber wants to unlock €7.5bn from pensions

Money could be made available for small business, says Dublin Chamber of Commerce

“As well as offering a new source of credit to business and start-ups, releasing pension funds for investment would provide assurance to those struggling with unsustainable debts,” says chief executive of Dublin Chamber Gina Quin.
“As well as offering a new source of credit to business and start-ups, releasing pension funds for investment would provide assurance to those struggling with unsustainable debts,” says chief executive of Dublin Chamber Gina Quin.
Up to €7.5 billion could be made available for small business if their owners were allowed to access their pensions early, the Dublin Chamber of Commerce has claimed in its pre-budget submission.
The organisation says about €30 billion is held in Irish pension funds related to individual or defined-contribution arrangements. The beneficiaries cannot access the funds until they are 60 years old.
Dublin Chamber wants individuals to be allowed access a portion of the funds in their defined-contribution pension before the age of 60 on a once-off basis for the specific purpose of investing in business. They believe this would “unlock” up to €7.5 billion but do not break down how they arrive at the figure. The cost to the exchequer would be €45 million, representing revenue from the levy charged on pension assets.
The funds would be used for specified activities, including:
 - Investing in a start-up company, possibly via a matched funding arrangement;
 - Investing in an existing small business with a view to scaling up and creating jobs;
- Capital expenditure within an existing business.
Chief executive of Dublin Chamber Gina Quin said: “As well as offering a new source of credit to business and start-ups, releasing pension funds for investment would provide assurance to those struggling with unsustainable debts that they can make a new start without the need to apply for fresh credit.”
The chamber has made a number of other suggestions relating to finance for small business in its submission. They include a change to the personal tax code to allow individuals to earn tax-free interest from personal loans to small business. This would boost peer-to-peer lending they argue.
“The peer-to-peer lending market in Ireland remains poorly developed. To date, only around €5 million in loans has been provided to business. The ability to lend to small business should be designed as widely as possible to encourage the greatest possible take-up.
“Therefore, there should be no limit placed on the tax allowance to loans made through third-party peer-to-peer channels.”ll

Why more companies want to wipe pensions off their books

Verizon has done it. General Motors has done it. And so have Ford and, recently, ketchup kingpin Heinz.
These brand-name companies have all moved part of their pension obligations off their books and into annuities run by insurance companies.
The move, called derisking, requires companies to pay a lump sum to purchase a group annuity from an insurance company. The insurer then takes over the retirement payments, wiping erratic pension obligations off the books of the purchaser.
For retirees, the move should make no difference: Their checks come as always, assuming the insurance company that sells the annuity remains in fine financial shape.
But for the companies buying the annuities, the change offers an opportunity to shed risk. That prospect has grown more appealing to companies as low interest rates and a volatile stock market have caused companies to pour billions into their pension funds to keep pace with accounting rules.
Now that the stock market is roaring and interest rates are expected to increase, buying annuities to get rid of pension obligations is becoming less expensive, and derisking is rising. A recent survey of 182 companies by Prudential found that 53 percent have either transferred defined benefit pension liabilities to a third-party insurer or “are likely to” in the next two years. That is a sharp increase from a 2010 survey.
“From a company’s point of view, there is longevity risk,” as people live longer, said Scott Gaul, a senior vice president for Prudential, which has done tens of billions dollars in pension-risk transfers. Also, “pensions are a very volatile liability on their balance sheet,” he said. “It has been a distraction for corporations, but from Prudential’s point of view, it is really our core business.”
With many traditional company pension plans frozen — meaning employees are accruing no new benefits and plans are accepting no new members — some advocacy groups worry that derisking will end up being yet another blow to retirement security.
The Pension Rights Center, which pushes for better retirement security, worries that converting pensions to insurance annuities could open retirees up to new problems. Often, when a company transfers a pension to an annuity, it also offers retirees the option of a lump-sum buyout, a move that is cheaper for companies than buying an annuity.
Those buyouts are often attractive to retirees who can get their hands on as much as hundreds of thousands of dollars at once, but few are prepared to invest the money in a way that will make it last a lifetime. Advocates also worry that annuities are not backed by a federal agency such as the Pension Benefits Guaranty Corp., which insures private pensions. In comparison, annuities are backed by state associations.
But the outgoing head of the PBGC sees no problems with derisking into an annuity. He said because companies have chosen to shed their pensions, the choice retirees face is not between a regular pension and an annuity, but an annuity and a lump sum of cash that has to last them through retirement.
“From our perspective, the bigger worry is how derisking is done,” said Joshua Gotbaum, director of the PBGC. “Derisking by transferring obligations to a reputable insurance company is infinitely better than offering employees a pot of money.”

AIICO Insurance leads on claims payment with N10.18b in 2013

AIICO Insurance Plc is leading other underwriters in claims payment as it paid N10.18 billion to claimants last year.

The claims payment status released by the National Insurance Comission (NAICOM) stated that the firm made the largest claims amidst the 22 firms that have secured approval for their last year's accounts.

The firm was followed by Leadway Insurance with N6.84 billion, Continental Re N5.9 billion, Custodian and Allied N5.76 billion, Mansard Insurance Plc N4.7 billion, Sovereign Trust Insurance N2.90 billion, Zenith Insurance N2.82 billion.

Others are Cornerstone Insurance N2.80 billion, Niger Insurance Plc N2.72 billion and NSIA formerly ADIC Insurance Limited N2.58 billion.

Airline Insurance Soars Amid Spate Of Crashes

The global airline industry faces the prospect of huge insurance premium increases, amid a spate of crashes.

The warning comes as the sector is forecast to see annual losses hit more than £1.2bn - the most expensive year since the 9/11 attacks in 2001.

The insurance industry has warned of huge premium increases on aircraft cover, as war is now seen as a threat to commercial flight paths.

The soaring premiums follow a hostile attack on Malaysia Airlines flight MH17 over eastern Ukraine, which killed almost 300 people on July 17.

The UN condemned the "horrendous shooting down" of the airliner and said it may be seen as a "war crime".

Recent conflicts in the Middle East and parts of Africa have increasingly turned underwriters' attention to "war" insurance policies.

On July 24, an Air Algerie flight AH5017 was crashed in a remote region of Mali, close to the border with Burkina Faso, with the loss of 116 lives.

And a day before a TransAsia Airways flight in Taiwan crashed in bad weather, killing 48 passengers.

Mystery still surrounds the disappearance in March of Malaysia Airlines MH370, which is believed to have crashed in the Indian Ocean with 239 people on board.

Airlines face sudden policy changes in relation to hostile attacks and could include cover cancellations with just days' notice.

The Financial Times said that some companies are demanding exact flight path details and may reconsider cover for flights over areas of conflict.

David Learmount from Flightglobal told Sky News that consumers are not likely to be hit by insurance increases, but said they may be affected by changing flight paths and fuel prices.

He said: "If airlines are now flying around Ukraine for example, instead of across the country, the plane will use more fuel and that might impact the cost of flights."

Although some airlines were flying over Ukraine prior to the loss of MH17, carriers are now avoiding flying over the country.

Similar concerns have now hit other regions. Emirates Airlines has stopped flying over Iraq and Mr Learmount said "it will lengthen journey time and therefore increase fuel consumption".

As the aviation industry is hit with insurance hikes, Malaysia Airlines is expected to see the highest increases, amid reports that it may seek to rebrand itself after losing the two aircraft this year.

Lloyd's of London, the world’s oldest insurance market, said it expects to see a bill running into hundreds of millions of pounds this year due to recent airline disasters.

Source Sky News

Sunday, 27 July 2014

Only 10 firms submitted second quarter results – NAICOM

Chuks Udo Okonta

The National Insurance Commission (NAICOM) has said only 10 out of the 59 underwriting firms have submitted their second quarter financial results for this year.

A statement by the Assistant Director, Corporate Affairs of the commission, Salami Rassaq, said the firms are ARM (Crystalife) Life Insurance which posted N585.61 million in the quarter; Equity Assurance Plc, N1.5 billion; Fin Insurance Company Limited, N222.45 million; Guinea Insurance Plc, N294.85 million; KBL (PHB) Insurance Limited N799.81 million; Linkage Assurance Plc N1.7 billion.

Others are Mutual Benefit Assurance Plc N4.37 billion; Old Mutual Nigeria Life Assurance Limited N594.60 million; Wapic Life Assurance Limited N372.55 million and Wapic Insurance Plc N1.7 billion.

Commission for Insurance Fola Daniel, has pledged to be publishing the quarterly positions of underwriters as part of the transformation programme of the commission, adding that there is no longer hiding place for operators who are not ready to embrace the change in the industry.   

Flight MH17: Aviation insurance rate likely to increase following crash, experts warn

By Jamie Dunkley

The cost of insuring aircraft is set to rise following the latest Malaysia Airlines disaster, experts have warned.

A total of 298 people, including 10 Britons, were killed when the Malaysian Airlines flight MH17 travelling from Amsterdam to Kuala Lumpur was struck by a surface-to-air missile on Thursday.

Catherine Thomas, director of analytics at A.M. Best, claimed that the series of incidents will cause a sharp increase in aviation insurance rates.

"Three consecutive large losses this year, the disappearance of the Malaysia Airlines flight MH370, hull losses due to fighting at Tripoli airport and the downing of Malaysia Airlines flight MH17, should now halt the decline in aviation rates."

Her comments were echoed by Andrew Horton, boss of insurer Beazley, who said aviation was likely to be one of the few lines of insurance that rises in price this year as excess capital across the market keeps down prices.

Lloyd’s of London insurer Beazley saw its pre-tax profits rise 61% to $61.4 million (£35.9 million) during the six months ending June 30 as it benefited from improved investment returns and fewer natural catastrophes.

The company made an investment return of $46.8 million in the period, compared to £300,000, and raised its interim dividend 7% to 3.1p.

Horton added: "Beazley performed well in the first half of the year, in a market that has become steadily more challenging.

"As we celebrate the tenth anniversary of our US operations, it is encouraging that we are currently seeing many of our best growth opportunities from our US based underwriters.

"At the same time we continue to attract talented underwriters to join Beazley on both sides of the Atlantic."

Source London Evening Standard

Regulator, Operators Differ On Causes of Insurers' Low Profitability


Nnamdi Duru

Nigerian Insurers Association (NIA), a body of operators, and industry regulator, the National Insurance Commission (NAICOM) have expressed opposing views on why most insurers are still unable to meet shareholders expectations with respect to profitability and return on investment seven years after consolidation.

While the regulator pointed out infractions and unethical practices on the part of the operators are responsible for this, the operators said their inability to meet investors' expectation may not be unconnected to over-capitalisation of the industry in 2007.

In the course of the last consolidation programme in the industry, life insurers were mandated to raise their capital from N150 million to N2 billion while general insurers and reinsurance companies were asked to raise theirs to N3 billion and N10 billion respectively.

The industry's capital base towers above N300 billion while operators were said to have collectively raked in premium income to the tune of N285 billion in 2013, a 15 per cent increase over the N247.58 billion they made in 2012.

The Chairman of NIA, Mr. Godwin Wiggle told THISDAY that the failure of many insurance companies to deliver on the expectations of shareholders with regard to profitability and return on investments is a pointer to excessive capitalisation.

He fielded questions on why the industry's premium income had continued to fall short of its capitalisation and how he felt when investors complained of not getting returns from many insurance companies seven years after consolidation.

"It is a question with two answers I want to put it that way. If you go back before 2007, most people complained that, do we really need that size of capital to do insurance in Nigeria, was that capital not excessive.

"That was the first question but the reality of it is beginning to dawn on everybody now that may be that N2 billion, N3, billion and N10 billion were excessive," the NIA boss said.

"We have not really used the capital to the maximum because insurance penetration has not really been deepened for us to reap the benefits of that capital. We are not a trading company that will use capital to buy and sell goods, we are insurance companies and we have guidelines to the extent of how we can invest our funds. That capital has not really got the benefits of return on investment. It is improving gradually but I think there must be some diversification," Wiggle explained.

He also encouraged insurance companies in the country to always strive to be more creative with their product offerings to ensure that they deliver on the promises to shareholders since returns on the investment of the companies were still very low and do not fill this gap.

Wiggle said "we all cannot be waiting to depend on our underwriting profit to be able to make return, we should create some levels of ingenuity in the area of investment to be able to complement it because if you look at our returns from the core area of insurance it is minimal. What is sustaining most of us is investment returns."

Allaying the fear of insurance watchers over this development, the chairman said operators have started building the process of ensuring that there is return on the capital invested in insurance companies since what makes insurance conglomerates thick is return on investment.

In some countries investment accounts for over 60 per cent of the total profit insurance companies report. It is investment made companies like Swiss-Re, AIG and others world rated institutions, he stressed.

Meanwhile, the Commissioner for Insurance, Mr. Fola Daniel said under-pricing of risks, poor investment policies and strategies coupled with excessive underwriting and management expenses and over-bloated and unpaid premiums were responsible for the poor showing of insurance companies in the country.

"No company will make profit and pay dividends if it writes business for almost free, give rebates and gratis but pay huge claims on risk it collected little or no premium on. This is what most of these insurance companies do

"Majority would rather invest as much as N5 billion in failing subsidiaries that will never yield dividends and thus, no return on investment. The situation is made worst because these subsidiaries which are not insurance related are outside the regulatory purview of NAICOM

"The management and underwriting expenses of insurance companies in Nigeria are about the highest in the world and I wonder why it is so. In most cases, the gross premium incomes of some insurance companies are almost always eaten up by acquisition and maintenance cost which unfortunately, are largely un-receipted," Daniel stressed.

The above, according to the commissioner, ensured that insurance stocks never did well in the capital market since most companies do not pay dividend and do not give bonus to shareholders while their share prices stagnate at 50 kobo per share.

"Not many of these listed insurance companies make substantial profit if at all they make any profit. The direct consequence of this is that these companies are not able to pay dividends, no bonus issue and no capital appreciation. In fact the price of most insurance stocks in the Nigerian Stock Exchange (NSE) remains at nominal value of 50 kobo," he said.

Daniel also accused shareholders of failure to effectively oversee the activities of the board and management of their respective companies, a situation he said gave rooms for fraud to be perpetuated in such companies.

Source Thisday



African Pension Fund Giant Relists On JSE

Africa's biggest retirement fund administrator, Alexander Forbes, on Thursday became the 11th company to list on the Johannesburg Stock Exchange (JSE) this year.

The company's return to the bourse's main board followed its delisting in 2007, when it was bought by a private equity consortium for R8.2-billion.

It listed with a market capitalisation of around R10.9-billion - putting it into the top 25% of companies listed on the JSE - and saw its stock jump by 14 percent to R8.55 a share by 9.15am.

The listing was preceded by a R3.7-billion public offering last week - South Africa's largest flotation in four years, according to news agency Reuters.

"Investors were drawn by the regular income from its pension management and insurance businesses, and the potential for growth in sub-Saharan Africa, where financial services are still developing," Reuters reported.

The company is a leading employee benefits consulting, actuarial, investment and administration services provider and retirement fund administrator, with R275-billion in assets under administration as at the end of March this year.

Alexander Forbes brings the number of financial services companies listed on the JSE to 28. "We are delighted to welcome Alexander Forbes back to the JSE, where it lists in the financial services sector, one of the most vibrant on the JSE," JSE CEO Nicky Newton-King said in a statement.

Statistics South Africa (SSA) estimates that the country's financial services sector created 13 000 new jobs in the 2013/14 financial year, and currently employs over 1.8-million people.

The JSE is Africa's biggest bourse, and one of the top 20 exchanges in the world in terms of market capitalisation.

Source allAfrica



Photonews: Sovereign Trust Insurance Plc owners manager meeting/ half year budget review session in Lagos

From left: Managing Dirctor/Chief Executive Officer, Sovereign Trust Insurance Plc, Wale Onaolapo; Managing Partner, Decision Process International,DPI, Kalada Apiafi and Executive Director /Chief Operating Officer, Sovereign Trust Insurance Plc, Samuel Ogbodu at the owners manager meeting/ half year budget review session of the underwriting firm at Intercontinental Hotel, Lagos.

Saturday, 26 July 2014

Lloyds bill for mis-selling insurance to top 10 billon pounds - analysts

Lloyds Banking Group is expected to set aside another 500 million pounds ($849 million) to compensate customers mis-sold loan insurance, bringing its total bill so far to over 10 billion pounds.

Analysts say Lloyds will detail the extra charge next Thursday alongside its first-half results, which are expected to show a 20 percent increase in underlying profit to 3.5 billion pounds ($6 billion).
British banks have set aside more than 20 billion pounds in total to compensate customers mis-sold payment protection insurance (PPI). The policies were meant to cover repayments if customers fell ill or lost their jobs but were often sold to people who did not need them or would be ineligible to claim.
Analysts at Deutsche Bank said that, by the end of last year, Lloyds had dealt with only 40 percent of customers who had been sold PPI since 2000, making it impractical to rule out further charges.
In a note previewing the results, Deutsche Bank forecasts a further 500 million pounds will be set aside by Lloyds in the second quarter, bringing its total bill to 10.3 billion pounds. Keefe, Bruyette & Woods analyst Mark Phin also expects Lloyds to take an additional PPI charge of 500 million pounds.
Like part-nationalised rival Royal Bank of Scotland , Lloyds is expected to say that it has benefited from improving economic conditions which are resulting in less borrowers having difficulty paying back loans.
However, also in common with RBS, its progress is being hindered by the fallout out from past misconduct. Lloyds is expected to be fined up to 300 million pounds next week following an investigation by U.S. and UK regulators into the alleged manipulation of the Libor benchmark interest rate.
Those factors threaten to overshadow a strong second-quarter performance that should strengthen Lloyds' case for re-starting dividends and boost the government's chances of selling its remaining shares before the next election in 2015.
Lloyds, which was one of the highest-dividend paying stocks in Britain before the financial crisis, has said it will apply to Britain's financial regulator to begin paying dividends again in the second half of the year.
The move is seen as key to the government's prospect of selling some of its remaining shares to retail investors, a commitment made by Finance Minister George Osborne.

The bank, which owns Bank of Scotland and is registered in Edinburgh, may reiterate potential risks it faces if Scots vote for independence from the rest of the United Kingdom in a September referendum. It has previously said that scenario would affect its cost of funding, taxes and compliance costs.
(Reporting by Matt Scuffham; Editing by Pravin Char)

Source Reuters