THE prevalence of foreign reinsurers, mostly European, that are presently taking about 65 per cent share of the Nigerian reinsurance market has been attributed to low underwriting capacity and shareholders’ funds of local reinsurers which are not sufficient to carter for the size of risk exposures.
Africa Re, a continental reinsurer, has indicated that it enjoys about 20 per cent of Nigeria’s reinsurance market share, while other Nigerian local reinsurers write about 15 per cent and the remaining 65 per cent are ceded to foreign reinsurers.
The reinsurance company stated: “In Nigeria, the biggest market in the West African region, Africa Re enjoys about 20 per cent of the reinsurance market share.
Other Nigerian local reinsurers write about 15 per cent market share, while foreign reinsurers have on the average about 65 per cent market share. The predominance of foreign reinsurers, mostly European, in the Nigerian reinsurance market has to do with the total low underwriting capacity (and shareholders’ funds) compared to the size of total risk exposures.
It stated: “Standing with Nigerian insurers, the Corporation has developed diverse partnerships to support the market development, for example in the mitigation of the forex risk. Unlike the foreign reinsurers, Africa Re accepts payment of reinsurance premiums in Nigerian bank accounts and in the national currency (Naira).”
The Corporation maintained that as efforts to support Nigerian economy, it has also invested over US$ 90 million in various Nigerian companies and indirectly created over 570 jobs, stressing that besides its involvement in the development of the insurance industry through in-house and market insurance trainings, it is also working with the National Insurance Commission (NAICOM) to enhance public awareness of insurance products in order to boost insurance penetration in the country.
Of the Corporation’s gross turnover which exceeded US$ 642 million in 2016, only 9.5% of this income is from mandatory cessions (in 41 member countries) of 5% on treaty business, the bulk coming from North Africa. This attests to the fact that the Corporation’s income is obtained on a voluntary, competitive and value-for-money basis.