Nairametrics| At a press briefing held in Lagos, newly established member of the Stanbic IBTC Group, stated it intentions to become one of the topmost insurance brokerage firms in the country, by leveraging on the retail network of its parent company and technology.
In an environment where insurance penetration is still quite low and the country facing macroeconomic issues, it may look appear foolhardy. The bank has done it s homework too.
The recently introduced bancassurance policy means insurance firms will collaborate with several firms to push their products. This exposes the firm to thousands of customers who already use Stanbic IBTC services. This serves as an additional source of income and removes the need for establishing its own retail network.
Aside retail customers, its South African ownership also gives it an advantage when pitching to South African firms. There are several prominent South African firms in the country including telecommunications firm MTN Nigeria as well as consumer goods retailer Shoprite. They would prefer to use a company that has South African ownership for their insurance needs. Old Mutual, a South African owned Insurance company, has also been in operation in Nigeria since 2013 and expanded operations in Nigeria by acquiring Oceanic Insurance in 2014.
The insurance industry in Nigeria has in the last one year undergone several reforms. Foreign investors have taken up majority stakes in several insurance firms. NAICOM has instituted a risk based capitalization programme, in addition to minimum capital requirements. National Insurance Commission (NAICOM, last year began the enforcement of a corporate governance code. Naicom had in 2015 revoked the license of 105 insurance brokers for not meeting up with capitalization requirements. The capital base for brokers was increased from N5 million to N20 million. There are currently about 300 registered insurance brokers in the country. The consolidation in the insurance industry may soon occur in the brokerage sub sector.
For shareholders in Stanbic IBTC, the new subsidiary may give shareholders reason to smile in the future. The bank currently makes about 50% of its earnings from other subsidiaries. Recently released results for the first quarter ended March 2017, showed that of the N16 billion profit made, N8 billion was made by its subsidiaries. Year to date, the stock is up over 35%, out-performing the Nigerian Stock Exchange All Share index which is down 6.27%.
The bank had last year settled a long drawn disagreement with the Financial Reporting Council of Nigeria (FRCN) over misstatements in its 2013 and 2014 financial statements. The FRCN fined the bank N1 billion and suspended some of its board members from signing financial statements. The bank then took the FRCN to court. Its 2015 and 2016 results were thus delayed, as well as a planned rights issue to shore up capital.