BusinessDay 21 Sep 2017

Thursday 21 September 2017 C002D5556 BUSINESS DAY 13
COMPANIES
& MARKETS
Company news analysis and insight
Continental Re’s underwriting
profit grows on reduced claims
BALA AUGIE
Schneider
Electric restates
commitment to
Innovation
P14
Continental Reinsurance
Plc has
maintained an efficient
underwriting
capacity amid
challenging macroeconomic
environment as underwriting
profit surged on account of
a sharp reduction in claims
expenses.
For the first six months
through June 2017, Continental
Re’s underwriting
profit rose by 158.11 percent
to N2.08 billion from N808.67
million the previous year.
The growth in underwriting
profit was underpinned
by a 33.49 percent reduction
in net claims expenses to
N3.51billion as insurance
claims and losses under loss
adjustment expenses recoverable
from retrocessionaires
reduced obligations to policy
holders.
The insurer’s combined
ratio (CR) fell to 80.79 percent
in June 2017 from 92.34 percent
the previous year, which
means the insurer had earned
more premiums than losses
plus expenses.
Combined ratios are seen
as a good measure of an insurance
company’s financial
health because they examine
profitability only from the
standpoint of the company’s
insurance operations.
Continental Re, the largest
privately-owned reinsurance
company in Africa, has
urged insurers to merge or
consolidate in order to retain
premium locally, take on more
risk and compete with some
of their peers in sub Saharan
Africa (SSA).
According to Femi Oyetunji,
the company’s group
managing director of the
company, Nigeria has 50 insurance
companies; Ghana
has 46; Kenya has 47. Oyetunji
revealed that Mozambique
has 18 insurance
companies. Liberia with
a population of only four
million has 20 insurance
companies.
Analysts agree that a
scheme of mergers and acquisition
can help shore up
the capital of insurers as these
firms have a very low valuation.
Furthermore, there is a
widening gap between the big
insurers and the small ones as
the former make up nearly 90
percent of profit and market
capitalization of the over 30
firms quoted on the floor of
the Nigerian Stock Exchange
(NSE).
“You still have the top six
insurance companies owning
and controlling more than 60
per cent of the market and that
means the other 50 companies
are not doing as much,”
said Kabir Okunlola, head of
the insurance audit group at
KPMG.
Apathy towards insurance,
weak regulations and economic
downturn are holding
back the growth of insurers
operating in the country.
Despite these monumental
challenges, Continental
Re’s gross premium written
was up 27.38 percent to
N15.19 billion in June 2017
from N11.92 billion the previous
year.
Similarly, gross premium
income (GPI) increased by
7.15 percent to N12.69 billion
in the period under review
as against N11.85 billion in
June 2016.
The second quarter premium
income of NSE insurance
15, the most liquid insurance
companies on the bourse,
have risen in the period under
Microsoft to provide over $13,000 cloud solutions to entrepreneurs
…Signs MOU with Tony Elumelu foundation
Jumoke Akiyode
Lawanson
Microsoft has
signed a memorandum
of
understanding
(MOU) agreement with the
Tony Elumelu Foundation
(TEF) to provide over $13,000
worth of cloud solution and
technology-based tools to
members of the TEF entrepreneurship
program.
The availability of technology
solutions will give about
3,000 TEF entrepreneurs
across 54 African countries
including Nigeria where over
50 percent of applications
come from; the chance to
effectively use ICT to modernise
their businesses, enrich
their offerings and reach new
customers.
Speaking at the signing
of the agreement at the Microsoft
head office in Lagos
on Monday, September 18,
2017, Akin Banuso, General
Manager, Microsoft Nigeria
said: “Through this partnership,
we have an opportunity
to reach out to more entrepreneurs,
in line with our
4Afrika initiative mission to
empower as many people as
possible.”
Banuso added: “As we
enter into an era of digital
transformation, it is vital that
we help all entrepreneurs
develop relevant technology
skills and integrate ICT into
their businesses. Technology
can help SMEs reach customers
outside their local markets,
generate powerful business
insights and improve their
customer retention. We have
found that SMEs who adopt
this kind of modern IT have
seen 15 percent faster revenue
growth than those not
using it.”
Also speaking, Parminder
Vir OBE, Chief Executive Officer,
Tony Elumelu Foundation,
said that the foundation
would leverage its partnership
with Microsoft to really
scale up its entrepreneurship
program.
“Currently, the foundation
provides 1, 000 entrepreneurs
with business
training, mentoring, access
to seed capital funding and
membership into the TEF
Africa-wide Network every
year. The program is scalable
and we can train more
people, considering that we
got more than 93,000 applications
last year which was
the third year and we could
only select a thousand.
Microsoft says it will also
identify high potential entrepreneurs
from the TEF
Entrepreneurship Program
and integrate them into its
Innovation Grant Program.
review after 2 year of tepid
growth that was caused by a
sharp drop in oil price and a
severe dollar shortage.
Experts have attributed
the uptick in the revenues
of these firms to increased
purchase of insurance policy
and improved economic activities
as the country exited
recession.
Further analysis of Continental
Re’s financial statement
shows net income
dipped by 1.55 percent to
N2.32 billion in the period
under review as gains on
foreign exchange slumped
88.89 percent.
The company’s operating
expenses reduced by 25
percent to N532.28 million;
underwriting expenses dipped
by 15.11 percent to N5.23 billion
as at June 2017.
Continental Reinsurance is
the largest private pan-African
reinsurer, outside South Africa,
writing business in more
than 50 countries across the
African continent. Established
in 1985, and listed on the Nigerian
Stock Exchange (NSE)
in 2007, Continental Reinsurance
provides support to over
200 insurance companies in
Africa with its main offices in
Nigeria, Cameroon, Kenya,
Côte d’Ivoire, Tunisia and
Botswana.
Adeniyi Olayemi, a TEF
entrepreneur already benefitting
from the partnership,
said: “the training I received
through the foundation
helped me to refine my business
idea and then produce
a successful proposal, then
once we received access to
Microsoft’s Azure software, I
was able to close on a deal.”
Since 2013, the Innovation
Grant Program has provided
financial support to over 55
local start-ups, who have since
generated $5.1 million in reciprocal
investments.