‘Global financial meltdown: Re-insurance companies lost 20 per cent capital’

By Ayeleso Oladele, Lagos Updated: Tuesday 17-02-2009

An icon in Nigerian insurance industry and the Managing Director, Africa Reinsurance Corporation, Mr. Bakary Kamara, has disclosed that the lingering global financial crunch has caused the Nigerian Reinsurance companies to lose of 20 per cent of their economic capital.

According to Kamara,a t a recent seminar in Ijebu Ode, Ogun State, reinsurance companies had lost between 15 and 20 per cent of their capital right from the beginning of the crisis to January 2009, but stated that the core capital for companies were more than enough to underwrite big risks.

Meanwhile, Mr. Kamara, who warned insurance operators in Nigeria over the lingering global financial crisis, said that the meltdown might extend beyond 2009.

He said that the global financial crisis might linger to 2010. According to him, “The global financial crisis is expected to continue into 2010.”

Notwithstanding, the Africa Re boss said that the demand for reinsurance would increase but added that companies should begin now to firm up their rates for obvious reasons.

During this period, he said that reinsurance companies could also survive on integrity and shareholders fund.

“We shall start to witness a gradual shift towards underwriting. Profitability is taking place as rates firm up in 2009 and for a number of years to come to due to higher capital costs and lower investment returns”

At this juncture, insurance organisations need to protect their assets and capital base, maintain liquidity, and mitigate the exposures to losses that may be developing. These and other actions should be taken to protect ratings and to maintain the confidence of their clients and the insurance public.