Local reinsurers’ mgt expenses gulp N6.63bn

Despite the poor state of insurance in the country, Nigeria’s major reinsurers, Continental Reinsurance Plc and Nigeria Reinsurance Corporation, sank over N6 billion into management expenses within a period of three years.

According to the breakdown obtained by this newspaper from the Nigerian Insurers Association (NIA), the amount, which covers from 2015 to 2017, is thrice that recorded against the firms’ investment income, which stands at N2.60 billion.

Details of the breakdown revealed that in 2015, Continental Re recorded N2.18 billion as management expenses as against N902.94 million for  investment income.

In the same year, Nigeria Re posted N2.58 billion as management expenses as against N291.18 million for investment income.

The report further hinted that in 2016, Continental Re’s management expenses dropped to N1.99 billion from the previous year’s figure just as the investment income also declined to N623.08 million.

For Nigeria Re, the management expenses recorded was N355.54 million as against N411.36 million for investment income.

The trend continued in 2017 with Continental Re posting N265.21 million as management expenses as against N-11.61 million for investment income.

Both reinsurance firms have also been battered by the country’s poor economy and unfriendly government policies over time.

Except for Continental Re that has taken its business beyond the country to other parts of Africa, Nigeria Re battles the poor local economy and other hostility induced apathy to remain afloat.

According to market statistics, European and other overseas reinsurers currently control about 65 per cent of the Nigerian business while African Re,  which is headquartered in the country, controls about 20 per cent.

The remaining 15 per cent is shared between Continental Re and Nigerian Re. This has deeply reflected in the premium grossed by the reinsurers.

A previous report, which gave a breakdown of the industry’s performance within a period of five years from 2011 to 2015, revealed that the total amount realised as premium by the reinsurers was N896.24 billion.

The transactions, according to the report, were specifically for general business, wherein the gross premium comprises mainly of businesses accepted from Nigeria by direct offices while local cession covers business ceded to reinsurance companies within Nigeria as well as direct companies for co-insurance jobs.

According to the details, the areas covered include Motor, Fire,  General Accident, Marine and Aviation, Workmen Compensation/Employers’ Liability, Oil and gas,  and Miscellaneous.

In 2011 precisely, the reinsurers accepted jobs worth N6.23 billion while it also ceded transactions worth N44.80 billion.

Following the same step in 2012, the operators accepted transactions worth N3.15 billion and ceded others amounting to N55.47 billion.

Similarly in 2013, while transactions worth N4.89 billion were accepted, the operators ceded N63.65 billion worth of transactions.

For the 2014 transactions, N1.98 billion worth of business was accepted as against N75.33 billion that was ceded out.

In the final year (2015) within the period,  transactions worth N1.96 billion were accepted as against N75.44 billion that were ceded.

Further details also revealed an increase in reinsurance ratio in 2015 (0.43) as against that of 2014 (0.42).

The reinsurance ratios for other years within the review period are 0.31 in 2011, 0.32 in 2012 and 0.37 in 2013.

In a recent global ranking of reinsurers, about 50 firms listed were dominated by European firms, which ironically receive ceded jobs from Nigerian underwriters.

The ranking was based on the gross premium written by the various reinsurers.

Nigeria’s two reinsurance firms were conspicuously missing in the list as the N896.24 billion gross premium written within a period of five years was far below the ranking parameter.

The report revealed then that Swiss Re supplanted Munich Re as the world’s largest reinsurer.

In this case, Munich Re’s significant primary operations accounted  for just over 30 per cent of its total GPW.

On the other hand, Swiss Re’s reinsurance/primary insurance split is more modest, with just over 15 per cent of GPW coming from insurance operations, putting it under the threshold to split out its insurance and reinsurance premiums.

The top reinsurers apart from Swiss Re Limited and Munich Reinsurance Company are Hannover Rück S.E., SCOR S.E., Berkshire Hathaway Inc., Lloyd’s, Reinsurance Group of America Inc., China Reinsurance (Group) Corporation, Great West Lifeco, Korean Reinsurance Company, PartnerRe Ltd, General Insurance Corporation of India and Transatlantic Holdings, Inc.

Others are Everest Re Group Ltd, XL Group Ltd, MS&AD Insurance Group Holdings, Inc. MAPFRE RE, Compania de Reaseguros S.A., RenaissanceRe Holdings Ltd., R+V Versicherung AG, The Toa Reinsurance Company Limited, Axis Capital Holdings Limited, Arch Capital Group Ltd, Assicurazioni Generali SpA, QBE Insurance Group Limited, Endurance Specialty Holdings, Pacific LifeCorp, Tokio Marine Holdings, Inc., and IRB – Brasil Resseguros S.A.

The list also includes Odyssey Re Holdings Corp., Aspen Insurance Holdings Limited, Caisse Centrale de Reassurance, Validus Holdings, Ltd., Deutsche Rueckversicherung AG, Sirius International Group, Ltd., Qatar Reinsurance Company Limited, Taiping Reinsurance Co. Ltd., Markel Corporation, American Agricultural Insurance Company, Maiden Holdings, Ltd, Chubb Limited, W.R. Berkley Corporation, Allied World Assurance Company Holdings, AG, Peak Reinsurance Company Ltd., Hiscox Ltd., African Reinsurance Corporation, Sompo Japan Nipponkoa Holdings, Inc.,Third Point Reinsurance Ltd., ACR Capital Holdings Pte, Ltd., Nacional de Reaseguros, S.A.  and Greenlight Capital Re, Ltd.

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