Nigerian Insurers divide widens as small firms play catch up
There is a widening gap between the big insurance firms also called the Big 5 and smaller ones in terms of assets base, underwriting performance and shareholders fund.
Leadway Assurance Limited, Aiico Insurance Plc, Custodian and Allied Insurance Plc, AXA Mansard Insurance Plc, and Mutual Benefit Assurance Plc (Big 5), have a combined total asset of N428.14 billion as at December 2016, which is 47.64 percent of the asset base of N902billion of thirty eight firms under our coverage.
However, analysts are of the view that a next set of insurers following the Top 5 otherwise known as the Big 10 (Zenith, Africa Alliance, FBN Insurance, Royal Exchange, Wapic Insurance, Niger Insurance, Cornerstone Insurance, Linkage Assurance, Lasaco Assurance and NEM Insurance) could be targets of acquisition by foreign investors in the case of capital raising and consolidation.
It should be noted that the combined assets base of the next Big 10 is N269.38 billion as at December 2016.
“We highlight that the next 10 account for 25 percent of the market and a consolidation of the first six Zenith, Africa Alliance, FBN Insurance, Royal Exchange and Wapic Insurance, of them could lead to the emergence of the largest insurance company in Nigeria by total assets and gross premium income, overtaking Leadway Assurance,” said analysts at Chapel Hill Denham Limited in a their December 5 2017 Insurance Sector report.
Stakeholders in the insurance industry have urged operators to embark on another round of consolidation and recapitalize in order for them to take advantage of the opportunities in the Nigerian economy.
Such a strategy would shore up the capital base of firms while giving them the leeway to take on more risk. A solid asset base will also enable insurers to fund new market penetrating products.
There have been some deals in the insurance industry in the recent past.
Cornerstone acquired 96.08 percent equity stake in FIN Insurance (non-life Insurer) in 2015.
Lasaco Insurance merged with its life and on life business in 2014 to become a composite insurer. Lasaco is 27.65 percent and 10.44 percent owned by Ibile Holdings and Canon Properties and Investment Limited.
Mutual Benefit Assurance Plc plans to raise additional capital of N4 billion via rights issue as it seeks to shore up capital.
Shareholders of Wapic Insurance Plc have approved the company’s plan to raise additional capital in the sum of N10 billion.
“The company is approaching its shareholders at this time to seek approval to raise additional capital as a proactive step towards getting the company ready and set for a much-anticipated regulatory increase in the minimum capital of insurance companies,” said Aigboje Aig-Imoukhuede, Chairman of Wapic Insurance.
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