At N11.6billion gross written premium in 2008, Leadway Assurance is clearly Nigerias leading underwriter in oil and gas risks. But the total premium is recorded against the companys total special risks portfolio comprising about 70% energy business and 30% aviation operations.
However, head of special risks division of the company Tola Adegbayi informed Vanguard that about 90% of that figure is reinsured. She also disclosed that Leadway does not front for any overseas underwriter or reinsurer in any prime risk in the country but carefully underwrites the business it undertakes with the available capacity.
Tola stated that misconceptions people have about the complexity of oil and gas business stems from their lack of knowledge of what obtains in energy insurance. Oil and gas insurance operates like any other risk any insurer underwrites, she stated emphasising that an understanding of the risk exposure and structure is key in assessing any business. The procedure is not changed in insurance of oil and gas, she noted.
The whole concept about proper analysis of risks remain fundamental in every case even in energy and other complex risks, she pointed out stating that underwriters often do not rigorously engage in portfolio analysis and assess their capabilities before they undertake some business and thus, run into problems when they see huge premiums and try to retain more than their capacity can accept.
Tola disclosed that the companys deeper knowledge in oil and gas stems mainly from its willingness to learn and the opportunity offered by government through the local content policy. Local Content has been beneficial on the knowledge side, she noted declaring that Leadway has achieved the needed knowledge base to write energy business.
Notwithstanding the low rating of local insurers in the oil and gas business in Nigeria, Tola insisted that Leadway is making headway in the business and understands very well its capacity and the need for a clearly structured treaty that allows reinsurers absorb the excess of the local market capacity.
The fact that reinsurers play lead role in determining pricing of large risks, whether they are industrial risks or oil and gas is function of the larger proportion of their participation, she stated.
Tola said a forthcoming pre-AGM public presentation of the companys 2008 result will be remarkably different from the previous ones as a financial analyst will talk on key fundamentals of insurance financials using Leadway as a benchmark.
She said the departure from past presentations is a response to public enquiries on issues of profit, reserves and the make-up of insurance companies statement of account. We are often asked why huge premiums are reported while profits are not measurable to the premiums, she stated adding that the results will be analysed for pubic enlightenment.