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Banks Owned Insurance Companies not Arrogant

By Patience Saghana

In this interview with Patience Saghana, Alhaji Auwalu Muktari, Managing Director of Fin Insurance Plc relays the vision of the company, where it aspires to be in the nearest future and also delves into topical issues such as post consolidation reform in the insurance sector. Excerpts

Update on Fin Insurance    You will remember that Yankari     Insurance had been in existence for quite a while as a full fledged insurance company. After consolidation, the company was taken over by First Inland Bank, and is now a full fledged subsidiary of the bank. There was also management restructuring. I started as a General Manager with Yankari Insurance on February 1, 2008. The management of the company has been trying to restructure the company in line with the vision of the bank and to the expectations of all our shareholders. The company started operation as Fin Insurance in February, 2009. We are only five months old but the current management of the company is one year and six months old. At the end of the first full year of our operations, the company premium income moved up from N513 million to N854 million with an investment income of N400 million totaling N1.2 billion income for that first full year. We have submitted our accounts to the National Insurance Commission (NAICOM) for approval while we hope to conduct our Annual General Meeting soon and declare dividends to our esteemed shareholders. We need to continuously reposition the company very well so as to deliver more effective services and create the needed awareness to both the public and private sectors in order for them to appreciate, patronise and accept Fin Insurance as a household name. We really want to compete effectively and efficiently too.

We have restructured the company to a large extent. We have also enhanced our old staff and employed new ones that are young and vibrant in order to collectively drive the company to where we wish it to be in no distance future. Presently, the company has contracted consultants from within and outside the country to come out with a five-year strategic plan for the company.

That will put us in a stead among the top five insurance companies in Nigeria by 2014.  The company should be among the best five in terms of premium income; assets base and in terms of our operation that is anchored on professionalism. Right now, we have a capital base of N3 billion but we hope to up it to N5 billion. We are opening seven new branches to add to the 17 we already have before the end of this year. We are also considering a life insurance company and a Health Management Organisation (HMO) and we already have the approval of the board on that. We should, before the end of the year, get our license on the Life Insurance Company.

Banks owned insurance companies suffer lack of funds?

As far as Fin Insurance is concerned, we do not have that problem. The board of directors of the company took their time to appoint a management that they have confidence in. Again, it is also part of NAICOM’s guidelines on corporate governance that funds should be released to insurance companies including Fin Insurance. Having complied with corporate governance, the funds were released to us. Therefore, Fin Insurance does not have a problem with funding. We have cash of N3 billion which we have investment in various banks aside our operational income that was in excess. We are focusing on property development and investment. More so, the company did not invest much in stocks hence we did not incur loss on our stocks portfolio.

Major accounts of Fin Insurance

We were predominantly in the business of Bauchi State Government as a Northern based insurance company at the beginning but after the recapitalisation, and when the current management came on board, we change that orientation and introduced a number of changes that endeared us to big businesses in the oil and gas sector in the both public and private sectors.  We are in the Nigerian National Petroleum Corporation (NNPC) accounts, AGIP, and many others big accounts.

Loss ratio of NNPC accounts

Oil and gas account of the NNPC is so profitable and the claims are not too huge. As we are talking now, Fin Insurance has an outstanding of $25,000 to pay on the NNPC account. This year, we got a premium of $200,000 from the account. Most insurance companies that have grown so big today got their fame from the oil and gas businesses because the bulk of their premiums come from oil and gas insurance businesses. The area where we pay huge claims, however, is on the group life. And the premium of the group life has been reviewed upward. This year they paid about $1.8 billion but Fin Insurance is not yet into life business for now but I can assure you that all other NNPC accounts are profitable.


We are looking at having a grip on micro-insurance. We are also happy that NAICOM, operators and the government are also looking at how best the industry can harnessed that area that have not been extensively covered. We at Fin Insurance want to capitalise on our banking network in order to spread out our services to every nooks and corners of this country and to also capture the new ideas on e-insurance. That was why a consortium of five insurance companies along with some insurance brokers and automated companies are already talking. We want to first of all capture Abuja and then Lagos before going to other states. Even the banks are involved in it. Premiums will be paid into an account that will later be shared among all the parties involved according to their percentage in the case of insurer and commission in the case of the brokers.

However, I will advise the small scale business owners to embrace insurance so that their businesses will remain in the market. Most of them die because when they suffer misfortune and they are not able to recover because of lack of insurance.
If you are to remain in business world of today, you need insurance no matter how little. Insurance companies will be there to get you back on track.

Reduction in the number of insurance companies
Reduction in the number of insurance companies operating on this country is a welcome idea. It will help to increase and enhance capacity of the industry. The new Central Bank Governor, Lamido Sanusi has mentioned something in that line and he has already set up a committee in that direction. And once that is achieve in the banks, insurance industry will follow suit because we are in the same financial sector. If GTB, Fin Bank, Oceanic Bank and Zenith bank decided to merger today, definitely their insurance companies will be left with no choice than to merge as well. About 50 per cent of insurance companies in this industry today are owned by banks. And if we are talking about reducing the number of banks, then the number of insurance companies will sure be reduced as well.

Unhealthy practices

We try not to be part of such degrading practices because we cherish our integrity hence we are not operating in isolation in this market. But I believe that the regulatory authority is working hard to stem unhealthy practices in the market. And from the way things are going now, we will not be talking about such practices again in the next two years.

Banks owned insurers are worst off

No. I do not agree with you or anybody on that. The argument making round is that banks businesses do not get to other non-bank owned insurance companies rather the bank owned insurers take all the juicy businesses of the banks. If you call it captive market, I can agree with you but not to say that we perpetrate bad practices in the market.  If Fin Insurance, for instance, has a captive market, Fin Insurance cannot carry all the risks of the company alone hence we get other insurance companies involved in the risks and we do not discriminate. We get either bank owned companies or non-bank owned companies. Again, Fin insurance cannot insure its own assets. Most of the company’s assets are insure with non-bank owned insurance companies. There is cooperation among bank owned insurance companies, that I agree with and again, we work in harmony. It is the people outside that feel that bank owned insurance companies are arrogant and do not have regards for others in the sector. Fin Insurance, for instance, made it known at the Nigerian Council of Registered Insurance Brokers (NCRIB) during the Brokers Evening’ that we are all one in the insurance industry and should be seen as one body.

Takaful Insurance

We are not into Takaful Insurance but we have a lot of products coming on which we wish to launch as soon as we are done with our strategic programme.

Offshore Office
We are looking positively towards that because our bank has started going out of the country and we want to leverage on that but we want to solve our internal problem first; put our house in proper order before going outside the country to showcase our products.


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.