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Currency devaluation, govt policies affecting W’African reinsurance operation — Ekundayo

Abiola-Ekundayo

Abiola Ekundayo

In this interview with NIKE POPOOLA, the Managing Director, WAICA Reinsurance Corporation Plc, Mr. Abiola Ekundayo, speaks on efforts by West African countries to jointly develop reinsurance in the region

How has been the financial environment for reinsurance operations in West Africa in recent years?

I can say 2017 was as good as any other year from the time we started. We have been able to write about $62.5m premium and profit of almost $7m. We have been paying dividend to our shareholders continuously. The first one was in the first year of operation and up till now, we have continued to pay. So, we have paid about $2.5m to our shareholders as dividend. It is not that everything was rosy in 2017, there were issues and even in 2016, but WAICA Re would have been able to do better in term of what we are doing in terms of the net performance, but because of the currency devaluation in all the countries and policies are not stable. In Nigeria, for example, in 2016 alone, we lost some millions of dollars there. Things will get better but generally speaking, we are trying our best because there is more competition now, but we are just lucky that the brokers want to do business with us.

How is the operating environment faring in 2018?

In 2018, we are looking at what we want to do to surpass what we did last year by the grace of God. Another problem that we have been facing is the collective outstanding premium. But this year, we are taking a giant stride. I told my team I that will not recognise premium production. What I will recognise is collection. So, your collection is your production for the year. If you have produced $10m and you collected $4m, the $4m is what I will recognise; and honestly from January till now, it is working. We have collected almost all our premium.

Do you still do business on credit in the sub-region despite the no premium, no cover law?

You know if you are talking of Nigeria, you cannot do that in Nigeria. We collect a lot from Nigeria and Ghana, but the French speaking countries don’t pay until a few years after.

How do you intend to stop doing business on credit in such countries?

We cannot stop but I try to mobilise my people to push to collect premium.

How have you been able to grow the WAICA capital base since you started operations seven years ago?

When we started, the authorised share capital was $100m that was in 2011, because our operation is denominated in dollars anyway because of the various currencies that are involved. After that, we raised additional $12.5m, we moved to $30m then to $50m and to$65m. Majorly, we have the public and private companies and government companies as our investors and on the board; so, we are well represented. As we speak, the National Insurance Commission is a shareholder of WAICA Re; Ghana Re is a shareholder; we have government companies and we have individual companies.

Do you have plans to raise additional capital now?

I can tell you that we are even starting. We are just starting because we are talking of 100 million authorised shares here and we have the interest of even raising it up even beyond 100 million and I must tell you that as of the time we started, it was one share per one dollar but now, our share is about 1.8 per cent. By the time we conclude the additional shares, the company will grow in value, not just in number of shares. So, we have tried to differentiate between the shares and the amount of shares so that at the end of the day, we will surpass 100 million shares in dollars.

How did the West African insurers come together to form a reinsurance firm?

When we talk of reinsurance, it has no bounds really so to say. We started because WAICA Re belongs to the West African English speaking countries of Nigeria, Ghana, Sierra Leone, Liberia and The Gambia predominantly. And when it was a pool really, reinsurers came together to set up the pool, but their intention then was that the company we were setting up would eventually become  a reinsurance company, but it took them almost 30 years or more before they could achieve that goal in 2011. That’s why it is difficult or not very common to see an individual having a reinsurance company.

Reinsurance by nature is an international business. One of the differences between insurance and reinsurance is that insurance is local, while reinsurance is international. Another one is that reinsurance is secondary, insurance is primary. If you want to do reinsurance, it has to be international; you meet people, you do business. If you want to concentrate on your country or your neighbourhood, you won’t go anywhere. That’s why when we started really because we inherited WAICA Re from the WAICA pool even that year, we started to get business from all over Africa, from North Africa, West Africa, East Africa, from all over, we were getting business. It is not possible as a reinsurance firm to concentrate on your country alone; so, we have even gone beyond Africa now.

Which other areas have you extended to beyond Africa?

We do little with the Asian countries. From the environment, you cannot say it is conducive or not, it is global. You look at your business as a global business, then you want to approach it globally, which is exactly what WIACA Re has done. If you look at the business from West Africa, when I say West Africa, I mean the English speaking West African countries, we are still okay. We are very close to almost half of the business.

But when we started, I told my team that look, I don’t want us to concentrate on only West Africa; I want us to go global, I want us to go anywhere and do business. You know there are areas you don’t go to, but even in Africa, if you want to concentrate on Africa alone, you can do well. That’s why you see some reinsurers don’t want to go beyond Africa; but in our own case, we have gone a little bit beyond Africa. When others are burning their fingers here and there, we thank God it’s not so with us.

How have you been able to spread your presence across the continent?

This is how we have been structured in WAIC Re. We have the head office in Sierra Leone. Under Sierra Leone, we have the head office in Abidjan in Cote D’Ivoire writing business for the French speaking countries. Then we have a contact of this in Nigeria then Sierra Leone, Tunisia, Ghana, and Nigeria and Abidjan we are together. But now, we have set up a subsidiary in Kenya. We have an office now also in southern Africa, that is in Zimbabwe. What we did in Zimbabwe was to acquire a reinsurance company; the minimal capital in Zimbabwe is $5m, which we also paid. Tunisia is a contact office under Sierra Leone. We wanted Morocco. Morocco is a closed market so we could not do business in Morocco so, we abandoned that one and went for Tunisia. Tunisia is friendly. It is a liberalised market and they received us. They even said pending the time you get your certificate, you can be doing business.

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