Breaking News

Custodian & Allied Insurance takes over NNPC-CIP from Leadway Assurance

By  Patience Saghana

In line with government objective to discourage monopoly in business community coupled with level playing field that now abound in the insurance sector, Custodian and Allied Insurance Company has won the Nigerian National Petroleum Corporation’s Consolidated Insurance Policy (NNPC-CIP) for 2010/2011.

Vanguard can authoritative revealed that Custodian and Allied Insurance won the NNPC-CIP for 2010/2011 from Leadway Assurance which had led the account for three consecutive years (2007 -2010).

Though, the premium for the 2010/2011’s NNPC-CIP account could be ascertained as at press time but the NNPC insurance premium for 2009/2010 was US$42,425,916.80.  Of this amount, the local market retained 48 per cent amounting to US$20,516,569.65 under the Nigerian local content policy. And a total of 39 insurance companies participated in the account with 19.5 per cent of the US$20,516,569.65.

NNPC said that the exposures of the Nigerian insurance industry to the nation’s oil and gas sector hit $101.14 billion (N11 trillion). The implication, according to the oil major, is that should all the available risks be taken, the local insurance industry with its foreign counterparts at the London Market would indemnify the said amount.

Multinationals appoint domestic insurance companies to participate in the juicy oil and gas insurance in accordance with Section 72 of the Insurance Act 2003 and the federal Government’s local content policy encouraged participation of domestic underwriting companies.

Insurance companies have in the last four years been making frantic efforts to boost their oil and gas department both in terms of human capital and facilities. A good number of them have achieved quite a lot in that regard.

They also invest huge sum in training and retraining of the staff within and outside the shore of the country.

More so, National Insurance Commission (NAICOM) ensures that local insurance companies participated substantially in oil and gas business as specified in the Insurance Act 2003. The commission also makes sure that insurance companies not only partake in the plum business but demonstrate capacity to write the business by ensuring that insurers have the minimum capital for the business.

Besides, NAICOM rolled out guidelines in respect of consortium bidding in the insurance of oil and energy risks in Nigeria.

To participate for instance consortium, leaders must have minimum net asset of not less than N7 billion. Also, member of any consortium must have a minimum net asset of N6 billion. According to the guidelines, each consortium must submit to NAICOM, profile of the international brokers and reinsurers to be used.

The total initial subscription of each member in a consortium group shall not the less than $500,000, and the subscription will be invested as stated in an agreed instrument as contained in the Memorandum of Understanding (MOU) to be signed by all members.

In addition, the insurance regulatory body collaborates with the Nigerian Local Content Division of the NNPC for adequate participation of local insurers in line with government’s target of 45 per cent by 2006 and up to 70 per cent by 2010.

All that had engender growing confidence of NNPC and other multinationals on the domestic insurance companies which had helped tremendously in reducing the huge capital flight in the insurance sector as well as boost the premium generation in the industry.

National Insurance Commission to a large extent contributed immensely to the enhancement of local content percentage which the industry is savouring today. The commission had on a number of times brokered agreement with NNPC on behalf of the insurance industry which cumulated into a good number of insurance companies forming consortium and bidding for the juicy NNPC consolidated account so as to meet the government directive on the local content policy on insurance.

Commending NNPC, Mr Sunday Thomas, Director (Inspection) of NAICOM remarked that the commission and indeed the insurance industry appreciate the oil major. “We must also appreciate NNPC particularly the Local Content Division because they have also been expanding the back ground of the local content policy works for the recognition of this signal.”

Meanwhile, Custodian & Allied Insurance recently rated A+ by Global Credit Rating Company (GCR) South Africa, has maintained a solvency well above 200 percent over the past three years and thus increased to 282 percent in 2008 financial year following a successful raising of additional capital of N4 Billion in March. The insurer’s rating was based on its ability to meet obligations as when due, its high solvency and high claims cash coverage ratio of 108 months in the 2008 financial year.

The Insurance Company manned by Mr Wole Oshin as MC/CEO has a sizeable investment portfolio which ensures strong investment income for the insurer and which in 2008 financial year more than covered operating expenses.

On the other hand, Leadway Assurance headed by Mr Oye Hassan-Odukale as Managing Director, made a gross written premium of N11.6billion in 2008. Of the total premium, the company generated about 70 percent from energy business and 30 percent from aviation operations.

Ms Tola Adegbayi, Head (Special Risks) of the company had told Vanguard that about 90% of that figure is reinsured. She also said that Leadway Assurance does not front for any overseas underwriter or reinsurer in any prime risk in the country.


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