By Joshua NSE
Hurley Doddy, is the Chairman, Continental Reinsurance Plc. An economics graduate from Princeton University who holds a Chartered Financial Analyst designation from the CFA Institute. He is currently Co-CEO of Emerging Capital Partners (ECP). Prior to joining ECP, he was an Executive Director at Sumitomo Finance International in London, where he managed the operations of a $200m equity risk arbitrage book, creating arbitrage and convergence strategies. He began his career at Salomon Brothers in 1984, lasting over 14 years, with assignments in New York, Tokyo and Sao Paulo. In Brazil, he was appointed Managing Director of Salomon Brothers for BancoPatrimonio, Salomon's joint venture in Sao Paulo. He has served on numerous boards including Financial Bank, Celtel International, Agromed S.A., All Africa Airways and Horizon Portfolio Limited. He was appointed as Chairman of Continental Reinsurance board on March 5, 2014. In this discussion with journalists during the yearly general meeting of the company in Lagos, he said there are huge opportunities for insurance business to grow in Africa. JOSHUA NSE was in attendance. Excerpts.
As the biggest West African reinsurer, what strategies have you put in place to emerge the biggest in the continent?
We have opened more branches in recent months. We now have offices in Cameroon, Kenya, Tunisia, Cote D'Ivoire and we shall be launching Botswana soon, so we are now present in all the major regions of the continent. Looking further on ways to grow, it is important to get credible people from those economies who shall nurture local relationships and have local knowledge. These are key to becoming the leader in Africa. We have to live up to our name, Continental Reinsurance. We are not a West African reinsurer, we are a Continental Reinsurer and our vision is to be the leading reinsurer on the continent. We think the company has made good strides and it's impressive. It is a company that is 27 years old and has spent a lot of time in building and growing its reputation.
How has Continental Re been able to sustain the culture of dividend payment to shareholders yearly?
Our business has been very good; the insurance business has a lot of room to grow in Africa, and in particular the reinsurance industry. It is just that the level of insurance penetration in Africa is very low, but with a good capital base, providing good services and sustaining a good rating, we are able grow our business because there is demand. The company has paid attention to its employees who we have continued to improve and develop through our training programmes; we have been able to attract good people in the country and across the continent - which is very much a key part of our localization strategy. The other key aspects are having a strong balance sheet, a good reputation for paying claims on time - an integral part of our business and a rating that is strong. All these are key to staying focused on our business. Additionally, positive progress in the economy has led to growth in our premium income and profitability year after year.
The company has initiated has new growth strategy, what does it entail?
One of the things we are trying to do is to increase our footprint in the continent. You need to be seen as someone on the ground in the local markets and that means establishing a physical presence in those markets. Giving the people who know the market the opportunity to apply local knowledge in those markets is very important to us - that is one of the key strategies of our growth at Continental Reinsurance over the coming years. We want to be able to expand credibly into the other regions of the continent and that goes a long way into servicing our clients.
What should we expect from Continental Re in the next few years?
We should expect a continued top line and bottom line growth from the company. I believe we have put in place expansive plans and we know they are going to bear fruit in the next year. You will see continued underwriting discipline that is going to keep our claims ratio and risk at minimum levels and that will continue to keep us profitable and continue to serve our customers.
How do you support the growth of the underwriting firms that you reinsure?
We spend a lot of resources on training - in helping insurance companies to upscale their employees expertise and to understand the reinsurance approach. We are paying claims and paying them on time is key. Insurance companies are counting on reinsurance. So, I think the companies are very aware that they can be successful if the industry as a whole is successful and that is part of our philosophy.
What are some of the areas underwriting companies need to improve on?
Collection of premium; clearing up of all receivables is not only an issue in Nigeria but across the continent. This is improving and the insurance regulator is taking steps to help and to increase the transparency of the balance sheet in the quality of reporting. These remain key steps that need continued improvement to make sure that the Nigerian insurance industry progresses and maintains global standards. The size of the insurance companies is small relative to the size of the banks, for instance, and that has to change. The industry needs to grow bigger, attract capital; people need to have confidence in the books, in records of the company, and their ability to perform.
What major innovations will boost the underwriters' premium?
The life business in general is small, it is growing but we need to accelerate its growth by introducing new products that are relevant to the people. Getting into the oil and gas business is very important as well. The industry is going to need to continue to improve and continue to become more sophisticated in their investment. As the capital market improves in Nigeria and Africa in general, you are going to get more types of bonds, more real estate products and the industry needs to understand this and be able to improve their returns without taking more risk by improving their diversification. That will be a major area for the industry attracting good long-term investors with more capital to have stable earnings and growth.
How convenient is the connectivity condition in Africa while doing reinsurance business?
That is one area that has improved over the time; the general level of connectivity within the continent of Africa. We now have good networks and, we can have video conferences, for example. It is interesting. The interconnectivity has been increasing in the telecommunications sector. Infrastructure across Africa really has helped a lot of businesses in Africa including Continental Reinsurance. Also, regional flights have helped connect people. As Africa becomes more connected, it makes it easier for us to do business. There are also barriers. You have to learn the different regulatory regimes, languages and cultures. It does require you to hire not just Nigerians but people from other countries who are able to deal with the real Pan-African workforce and to understand and work well with people from other cultures. We have embraced that at Continental Reinsurance both on our Board and also in senior positions in the company.
How can reinsurers in Africa compete favorably with the international ones?
The international competitors are strong; they have the strong balance sheets and good reputations. For us to compete with them, we have to compete on service. We have to be more on the ground. Our offices are helping the local market and we are able to do that because we are based here in Africa. We have a strong presence here and we need to maintain financial strength. People consider the credit rating that the international reinsurers have. We need to have a credit rating that customers find adequate, and we need to combine that with excellent service. Having to compete with the big guys is good for the business. We are not looking for protection, we don't have some part of the market that is reserved just for us, we need to go out there and give products that are well priced to compete with those guys.
How is the available capacity in the African continent?
I think reinsurance in Africa is still small and undercapitalized compared to the opportunities and growth in the African market. For us, we see room to continue to grow because we think the demand is going to continue to remain higher than the supply so we are going to see a bigger industry in five years, in ten years and more capital in the industry. Continental Reinsurance hopes to play a major part in Africa's growth in the reinsurance sector.
Source: The Guardian
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