THE nation's insurance industry was, again, in the news last week. One of the major players in the space,
Announcing the deal, the managements of the two insurance giants -
Why the divestment?
Not a few have queried the decision of FBNH to do away with its ten- year- old insurance subsidiary, which by all intents and purposes, can not be said to be doing badly in a market that is potentially viable, but highly conservative and poorly organized.
For instance, one of the arguments adduced by this class of analysts is hinged on the fact that
But, the management of the Group would not see anything unusual in the decision. The divestment, which took effect from
Besides, he argued, the divestment would go a long way in ultimately improving the company's shareholders' wellbeing and delivering greater value to all the stakeholders, and a means of deepening the insurance market.
With Shareholders' Agreement, which gave pre-emptive rights to the South African insurance company, successfully activated, the Chief Executive Officer of Sanlam,
The company, he added, was only exercising its pre-emptive right to acquire the remaining shareholding of
Performances
Interestingly, the deal has, undoubtedly, thrown up a lot of puzzles. Quite a number of market watchers are still stupefied at the decision of Sanlam to further throw its hat into a business ring, that seems not to be enjoying the best of times, presently. It is an open secret that a sizeable number of Nigerians will still not touch insurance products with, even the longest pole. So where is the optimism, on the part of Sanlam, to buy up
But, not a few are quick to hinge such optimism on the impressive performance
The insurance company's performances, in the past few years, bear eloquent testimony to an outfit, well-run enough to attract interests from investors both within and beyond the shores of the country.
Financials
For instance, figures obtained from the published financial statements of the company, for the year ended
While the company's profit before tax grew by 44 per cent, from 4.26 billion in 2017 to N6.13 billion in 2018, the Gross Premium Written (GPW) also grew from N19.6 billion in 2017 to N26.0 billion in 2018, accounting for a 33 per cent increase. Its Return on Equity (RoE) also rose to 45 per cent, an increase from the previous year's performance of 34 per cent, achieving a post-tax Return on Assets (RoA) of 8 per cent, in the year.
Products and unique selling points
One of the key factors that kept the company going, prior to the acquisition, was its ability to leverage the brand equity of the parent company,
'The name
Ojutalayo continued: 'There is no way
While Ojutalayo's claims might not be far from the truth, many however believe that the management of the insurance company, had, in the past one decade, also, come up with some innovative policies and products that did not only attract customers, but also enhanced the company's fortunes and impacted its bottom-line, positively.
For instance, it is on record that the company, which was licensed about one decade ago, became the first insurance company to launch mobile insurance in partnership with Airtel through airtime purchase, in
The product became an instant hit in the sector, then; an innovation, stakeholders believe, went a long way in deepening insurance business in
Laurels
Interestingly, the impact of these tech-induced innovations on the sector could be seen in the laurels and recognition they eventually earned the company. For instance, the insurance company, on
According to the
'And if firms cannot effectively exploit systems such as AI and the IoT, they risk being left behind. Clearly,
The award, therefore, was, without doubt, an attestation to the insurance company's innovative and resilient attributes, coupled with the forward-thinking personnel it parades.
Another feather that clearly adorns the cap of this insurance outfit was its recognition as the 2018
Transfer of a legacy
For financial analyst and Chief Executive Officer of Wealthgate Advisor, Mr.
'We've seen
He also dispelled misgivings that such deal was bad for the nation's insurance space and the home-grown brands, playing there.
'There is nothing unusual in all these things, and I don't think it's bad for the system. Even one of the biggest banks in the
The Wealthgate Advisor boss would rather want the divestment deal to be seen as a 'transfer of a legacy', built over a decade, arguing that the fact that the insurance company was able to get a look-in from one of the biggest players in the business, around the world, should be seen as a huge positive.
'I would rather see it as a transfer of a huge legacy. A legacy, huge enough to attract global beckoning. One, we are looking for FDI, and it has come in form of this deal, that's injecting foreign capital into that business, apart from the inflow of dollars that would also come into the nation's economy. It would also be an augmentation of the stock of foreign currency that we have, and this will help us stabilize the value of the naira,' he stated.
The nation's insurance business, as a whole, is not left out of the benefits, he added. For instance, by the deal, the new company, known for its expertise in insurance business would be deploying such expertise in the nation's insurance space, thereby deepening the sector, because of its global reach.
The unanswered question
Interestingly, as convincing as the above argument and those of others in support of the deal might sound, Ojutalayo however believes it remains a huge blow to those drawing inspirations from the
'The sustenance of the FBN Insurance brand would have given a boost to our drive in building a truly made -in-
But while the question of 'why sell such a befitting legacy?' will continue to linger, not a few would however find solace in the fact that the overall impact of the deal will be positive on the industry.
© Pakistan Press International, source