Nigerian insurance firms capture 2.4% market share in Ghana

...As sector shows sign of strain over outstanding premium

For the half of 2009, four Nigerian insurance firms out of six captured an abysmal 2.4 percent market share in terms of premium income amounting to 5.03 billion cedes, as against 129 billion cedes generated by the entire market within the same period in Ghana.

Industrial and General Insurance (IGI) Ghana and NEM Ghana figures were not available at the time of filing in this report, while the percentage reflects the results from operations of International Energy Insurance Ghana; Regency Alliance Ghana; Equity Assurance Ghana, and Intercontinental Wapic Ghana. International Energy led among Nigerian insurance firms in terms of premium generation and came 13 among 19 companies doing general insurance business in Ghana.

The company generated 2.36 billion cedes, about 1.82 percent of the total market share, followed by Equity Assurance that got 1.46 billion cedes and a market share of 1.12 percent.

Regency Alliance garnered 763.06 million cedes, equal to 0.58 market share, while Intercontinental Wapic came least among Nigerian companies with 449.78 million cedes, equal to 0.34 percent.

There are also signs that the industry may come under severe strain as a result of huge outstanding premiums from transitions of policyholders. Analysis of the result shows that 19 out of the 20 underwriters of the non life portfolio generated 129.52 billion cedes as gross premium income.

And out of this figure, about 63.53 billion cedes is owed the companies by policyholders - representing 49 percent of the entire premium income generated under the period in review.

For example, the best performing company in the market, SIC Insurance, as at half year was owed 15.15 billion cedes out of 28.65 billion cedes premium generated, amounting to 52.9 percent.

Three insurance companies, Donwell Insurance, Unique Insurance, and Phonix were owed as outstanding 132 percent, 115 percent, 113 percent, respectively, while two Nigerian companies were owed 65 percent, 45 percent also. The analysis further reveals that 44.23 million cedes was ceded as reinsurance premium by the market.

Some experts say it’s still too early to conclude about the justification for offshore expansions of some Nigerian insurance firms post capitalisation, when the local insurance market was yet to be fully explored. The argument is that these companies would need some time to settle down in their new investments environment before they can really begin to market returns to their parent companies, down home in Nigeria.

But how long this waiting would last remains the issue, since such investment if utilised locally, wouldn’t take more than 12 months to begin to make returns, if it was of branch openings.

For the companies in the Ghanaian market, it may take longer time than necessary before those investments would contribute reasonably to the overall growth of their mother company, going by their present performance records. Like a managing director of one of the companies that had initially expanded to Sierra Leone but withdrew its investment after a trial, “it is a waste going to invest in these markets that cannot compete with Nigeria.”

According to him, what one of his branches in Nigeria contributes in terms of premium is four times more than what he got in offshore operations, despite all the stress involved.

“We discovered that we were better off opening new branches in any part of the country than going to open an offshore subsidiary. So, we learnt our lesson even though the experience was harsh.”