AM Best notes growing interest in GCC captives

By Favour Nnabugwu


AM Best has expressed keen interest in the creation of captive insurance companies in the Gulf Cooperation Council (GCC) region, due partly to the hardening trend of international commercial insurance rates.

The rating agency observed that the use of captive re/insurance in GCC countries has been limited to date, despite overall strong growth for the global captive industry in the past decade.

However, with reinsurance rates hardening, primary insurers in the region are now retaining more risk and looking to captives as one possible option for managing it.

And significantly, this interest has not come from the traditional users of captives, such as the energy and heavy industry sectors, and state oil enterprises.

Historically, most captives in the GCC region have acted as reinsurance captives, using a fronting commercial insurer to issue the insurance policy, and then retroceding most of the risk in the international reinsurance market.

In addition to hardening rates, AM Best suggested that other factors could be helping to drive interest in captives, including positive regulatory developments, maturing risk management among regional companies, and the availability of professional management services.

AM Best therefore maintains a strong outlook for the development of the sector in the GCC, but warned that captive sponsors and other stakeholders should be aware of key risks, such as a heavy reliance on the ability of professional managers, along with the exposure to disputes and credit risk associated with reinsurance counterparties

FBNInsurance upgrades payment platform

By Favour Nnabugwu


FBNInsurance Limited has upgraded its business solutions and payment platforms to ensure clients easy access and premium payments.

The Managing Directorof FBNInsurance, Mr  Val Ojumah stated that the upgrade was a strategic approach to improve the company’s customer experience in relation to prompt and easy allocation of premium payments made by the customers through online platforms.

Ojumah in his statement, said: “We have upgraded our platforms to optimize services to our customers. Part of the benefits of this upgrade includes: instant SMS/email payment notifications, Online Receipts for payment made remotely, prompt allocation of premium, direct online transfers (internet banking), and faster policy processing turnaround time.”

He further added that the upgrades would ensure policies are validated before any premium payment process is completed. He stated that the upgraded payment platforms are available at all bank branches, Automated Teller Machines (ATM), Point of Sale (POS) Terminals at FBNInsurance’s sale outlets and online; via our website, payment and sale platforms.

He reiterated the commitment of the company towards fulfilling its promises to customers by insuring their most valued assets and safeguarding their future through continuous development and utilization of technology to deliver quality service to the ever-changing needs of the customers.

Recall that FBNInsurance, a member of the Sanlam Group, recently won the Best Life Insurance Company in Nigeria at the World Finance Global Insurance Awards 2020. The success represents the fifth time the company has received the award, after previous wins in 2014, 2016, 2017 and 2019.


Global insurance industry faces IFRS 17 costs estimated at US$20bn

By Favour Nnabugwu


The total cost faced by the global insurance industry to implement IFRS 17 is estimated to be US$15-20bn, according to Willis Towers Watson.

Kamran Foroughi, Global IFRS 17 Advisory Leader at Willis Towers Watson, said: “This is an extraordinary figure that will naturally lead to many questions from boards and investors.

“For many, significant improvements will also be required in business processes and finance operations to deliver IFRS 17 efficiently and link with other metrics. With smart investment and the right people, an insurer’s IFRS 17 programme has the potential to help deliver long-term annual savings to show against the daunting up-front costs.”

The Willis Towers Watson study polled 312 insurers from 50 countries and is believed to be the most comprehensive IFRS 17 survey to date. Estimated costs vary significantly by insurer size. The overall global industry estimate of the cumulative cost of delivering IFRS 17 is US$15-20bn, with the average programme cost for the 24 largest multinationals being US$175-200m each, and US$20m each for the remaining 288 insurers.

In addition to providing insurers with the opportunity to benchmark their programmes against the efforts of industry peers and insurance companies around the world, the survey also revealed the top challenges insurers expect to face in order to successfully implement IFRS 17, principally relating to people, data, systems and processes.

Other key findings include:

  • Over 10,000 Full Time Equivalent employees will be required to deliver IFRS 17. This presents major challenges for insurers’ recruitment and retention strategies, both within and beyond their IFRS 17 programmes.
  • Only 52% of survey respondents believe that IFRS 17 earnings / equity will be slightly or much more helpful than current GAAP earnings / equity, and 54% believe that the need for non-GAAP reporting will either slightly or significantly increase.
  • Only 6% of companies in 2020 had a good understanding of the business implications of IFRS 17 – this has now improved to 17%. Insurers believe that the impact on a majority of KPIs is likely to be small. KPIs which are believed to be affected are related to measuring profit, new business and return on capital/equity.
  • Large multinationals have made more progress on a scale from 0 to 5 (average: 3.5) than the remaining insurers (average: 2.6), with progress highest in EMEA (average: 2.9) and lowest in APAC (average: 2.4). Nevertheless, much work remains and companies need to consider how best to ensure benefits of the IFRS 17 programme.

Since Willis Towers Watson’s last survey in June 2020, clear progress has been made in areas such as data and IT workstreams, although setting up a robust process designed to comply with tight reporting schedules remains a challenge. The survey also reveals little progress made in dry runs, disclosures and automation. Yet, given the lack of qualified resources, Willis Towers Watson predicts process automation will be critical to the successful implementation of IFRS 17.

Kamran Foroughi said: “Strong doubts evidently remain about whether IFRS 17 will lead to a more useful metric than current GAAP/IFRS standards. This is particularly true in more mature markets, where we do not see an improved KPI benefit commensurate with the costs, and insurers are actively planning new supplementary reporting to help explain business performance.

“If insurers are to unlock value from IFRS 17 they should be aiming for significant business process improvements including automation, efficiency and auditability ‘out of the box’. This will save time and money, allowing experts to be deployed on higher value tasks and enabling insurers’ reporting functions to do more, faster and with less. Regulation can be a spur to drive performance, if the conditions are right.”

Coronation insurance settles N6.91bn claims in 2020

By Favour Nnabugwu


Coronation Insurance Plc has paid N6.91 billion as claims in 2020, signifying a 69.5 percent increase, according to its consolidated and separate financial statements for the year ended 31 December 2020 on the floor of Nigerian Exchange Ltd.

Its total claims paid rose by 69.5 percent to N6.91bn in 2020 while underwriting profit rose slightly by 12.5 percent to N3.29bn.

Its profit after tax rose from N214.327 million in 2019 to N1.202bn as profit for only the company went up from a loss of N308.981m in 2019 to N215.492m profit.

However, the company’s gross premium written grew to N11.64bn from N10.71bn while fee and commission income for the year under review increased by 6.7 percent to N2.11bn

Alexander Forbes completes insurance exit with AF Life sale

By Favour Nnabugwu


African financial services firm Alexander Forbes has concluded its exit from insurance business following the sale of transfer of its risk and retail life business to South African insurer Sanlam Life.

The business operations formed part of AF Life, a long-term insurance company and wholly owned subsidiary of Alexander Forbes that provides group risk and retail life insurance policies with a focus on small to medium clients.

The business now discontinued recorded gross insurance premium income of R 1.0 billion (USD 72.5 million) for the year ended 31 March 2021 from over 630 institutional clients and approximately 3,700 individual clients.

Sanlam purchased the AF Life policies for a total cash consideration of R 100 million (USD 7.2 million), 50% of which will be deferred in two equal payments, 12 and 24 months, from date of the acquisition.

“We are pleased with the Proposed Transaction, in the context of the current operating environment,” said Dawie de Villiers, Chief Executive Officer of Alexander Forbes.

“This disposal is the final step in our move away from providing insurance underwriting and reaffirms Alexander Forbes’ strength as a trusted adviser to our clients. The Proposed Transaction not only benefits Alexander Forbes, through the realisation of value for shareholders, but also balances solutions for clients and protects and values the employees of the Business,” de Villiers continued.

“Sanlam understands the importance of delivering financial well-being and I am confident that the clients and employees moving across in this process are in good hands. We will continue to play a key role to the valued clients of AF Life delivering best advice throughout the transition and into the future.”

Headquartered in South Africa, Alexander Forbes provides retirement, investment solutions and wealth management to clients in its home country and in Namibia, Botswana, Zambia, Uganda, Nigeria and Zimbabwe.