Business News
NAICOM boss makes case for recapitalisation, insists exercise will build a stronger insurance sector
NAICOM has refuted claims that the recapitalisation exercise would reduce the number of insurance firms operating in the country.
Contrary to widespread claims that the ongoing recapaitalisation process would trim down the number of insurance companies operating in the industry, the National Insurance Commission (NAICOM) has assured stakeholders that the process would be beneficial for the sector.
The Details: Reacting to the claims, acting Commissioner of NAICOM, Mr. Sunday Thomas explained that the aim of recapitalisation is to strengthen the insurance sector and aid economic development.
He said this at the 2019 Insurance Stakeholders Consultative Forum organized by the Lagos Chamber of Commerce and Industry (LCCI) in Lagos.
[READ MORE: NAICOM wants to integrate all insurance transactions into an online portal, here’s why]
Thomas urged other practitioners to be concerned about the growth of the retail segment of the business and the automation of insurance processes as a means to reposition the industry for better.
“Our standing the largest market in Africa in terms of population and our rating as Africa’s biggest economy are not for nothing.
“They should be able to deliver to us a robust insurance business in Nigeria. There are few key things that if we can get right at them will enable us to jump-start the industry.
“So, the drive toward financial inclusion and the recapitalisation exercise going on now in the insurance sector are efforts that give us hope that the insurance market stands and distinguishes itself in the Nigerian financial sector,” Thomas said, adding that “dependability, trustworthiness, prompt and fair claims settlement and introduction of innovative products and technology are the things that it will take to place the industry on the part of prosperity,” he said.
In addition to the NAICOM boss’s remarks, Babatunde Paul Ruwase, the President of the LCCI noted that the essence of the stakeholders’ forum was to find solutions to the numerous challenges facing the sector as well as chart a new course for the industry.
Ruwase said: “The insurance sector has not shared in the growth experienced by other segments in the financial services sector, such as pension funds, mutual funds and banks, in the last decade.
“According to the data by the National Bureau of Statistics, the insurance sector contributed 0.5% to our Gross Domestic (GDP) IN 2019 and grew about 4% in the same.
“Nigeria’s insurance industry has hardly grown in real terms in the last ten years due to major headwinds affecting players including economic and regulatory uncertainties, unwillingness of people to purchase a policy as well as cultural and religious sentiments.”
[READ ALSO: NAICOM boss cautions boards against interference in management activities]
Yesterday, the number of insurance firms that secured no objection from the National Insurance Commission (NAICOM) to go ahead with their recapitalisation plan jumped to 44 from 26.
Commodities
Five oil majors reduce value of their assets by $50 billion in Q2
Energy demand at one point was down by more than 30% globally.
Five oil majors (including Exxon Mobil and British Petroleum) reduced the value of their assets by $50 billion in Q2, 2020. They also reduced their production rates as the COVID-19 pandemic caused a downward trend in energy demand.
What this means: The cut in asset valuations and reduction in crude oil production by these oil majors showed the depth of damage the COVID-19 pandemic caused on the global energy sector in Q2, 2020.
Energy demand at one point was down by more than 30% globally and still remains below pre-pandemic levels.
Some of these conpanies’ executives said they took these austerity measures because they expect demand to continue to be on the downward trend in the meantime. This is in view of the fact that people around the world are traveling less, even as many global industries are not in full capacity. The pandemic has already killed more than 700,000 people.
Of those five oil majors, only Exxon Mobil (XOM.N) did not book sizeable impairments, Reuters reported. However, an ongoing re-evaluation of Exxon Mobil plans could lead to a reasonable amount of its assets being impaired, and signal the removal of 20% or 4.4 billion barrels of its oil and gas reserves.
Oil major BP (BP.L) took a $17 billion hot. It said its plans in the coming years would be a focus on renewables and fewer fossils.
About two weeks ago, Nairametrics reported how Exxon Mobil and Chevron posted their worst losses in modern history, as the COVID-19 pandemic and a glut in crude oil reduced the demand for energy products in the second quarter of 2020.
Hospitality & Travel
US gives reasons it warned citizens against travelling to Nigeria, lists 12 high risk states
The US government has issued a level 3 Travel Health Notice for Nigeria due to COVID-19.
The United State Government has advised its citizens against travelling to Nigeria due to the Coronavirus pandemic, terrorism, civil unrest, kidnapping, widespread inter-communal violence, and others.
This warning is contained in a travel advisory statement that was obtained from the United State Department of State website.
The statement also disclosed that the Centre for Disease Control and Prevention (CDC) had issued a level 3 Travel Health Notice for Nigeria due to the Coronavirus pandemic. Also, some parts of the country have increased risk.
“Reconsider travel to Nigeria due to Covid-19. Reconsider travel to Nigeria due to crime, terrorism, civil unrest, kidnapping and maritime crime. Some areas have increased risk.’
‘’Do not travel to; Borno and Yobe States and Northern Adamawa State due to terrorism; Adamawa, Bauchi, Borno, Gombe, Kaduna, Kano and Yobe States due to kidnapping; Coastal areas of Akwa Ibom, Bayelsa, Cross Rivers, Delta and Rivers States (with the exception of Port Harcourt) due to crime, civil unrest, kidnapping and maritime crime,’’ the statement said.
It stated that violent crimes such as armed robbery, assault, carjacking, kidnapping, and rape, have become common throughout the country. As such, US citizens were advised to exercise extreme caution throughout the country due to the threat of indiscriminate violence.
“Terrorists continue plotting and carrying out attacks in Nigeria, especially in the Northeast. Terrorists may attack with little or no warning, targeting shopping centres, malls, markets, hotels, places of worship, restaurants, bars, schools, government installations, transportation hubs, and other places where crowds gather.
“Sporadic violence occurs between communities of farmers and herders in rural areas.’’
The US government acknowledged the fact that it has limited ability to provide emergency services to US citizens in many parts of Nigeria due to the security conditions.
Going further it stated, “Do not travel to Borno and Yobe States and Nothern Adamawa. Terrorist groups based in the Northeast target churches, schools, mosques, government installations, educational institutions and entertainment venues. Approximately two million Nigerians have been displaced as a result of the violence in Northeast Nigeria.
“Do not travel to Adamawa, Bauchi, Borno, Gombe, Kaduna, Kano and Yobe States. The security situation in Northwest and Northeast Nigeria is fluid and unpredictable, particularly in the states listed above due to widespread inter-communal violence and kidnapping.
“Do not travel to the coastal areas of Akwa Ibom, Bayelsa, Cross Rivers, Delta and Rivers States (with the exception of Port Harcourt). Crime is rampant throughout Southern Nigeria, and there is a heightened risk of kidnapping and maritime crime, along with violent civil unrest and attacks against expatriate oil workers and facilities.’’
Energy
World’s largest oil company to pay $75 billion annual dividend, despite plunge in profits
Saudi Aramco is the national energy company of Saudi Arabia.
The world’s largest oil company, Saudi Aramco reported a 73% drop in profit Q2,2020 profit and still kept its plans to pay $75 billion in annual dividends in a report credited to Bloomberg News
Saudi Aramco reported a plunge in profits for Q2,2020 of 24.6 billion riyals compared to 92.6 billion riyals recorded in the same corresponding year.
Aramco will pay a Q2,2020 dividend of $18.75 billion, most of it to the government of Saudi Arabia, the company’s major shareholder.
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The plunge in profit was due mainly to “the impact of lower crude oil prices and declining refining and chemical margins,” Aramco said in the statement to the Saudi stock exchange.
“Strong headwinds from reduced demand and lower oil prices are reflected in our second-quarter results,” said Chief Executive Officer Amin Nasser.
“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies.”
READ ALSO: Shoprite’s owners to leave Nigeria after 15 years
Quick fact; Saudi Aramco is the national energy company of Saudi Arabia. It produces five grades of crude oil and natural gas liquids.
It also produces refined energy products that include liquefied petroleum gas, ethanol, naphtha, and other products.
It exports about 75% of its crude oil to foreign markets, most often with its oil tankers. Saudi Aramco has access to crude oil reserves of about 260 billion barrels, the largest in the world.
READ ALSO: Nigeria’s Petroleum minister and Saudi Aramco discuss investment options
OPEC’s largest oil exporter, Saudi Arabia has been hit hard by global economic restrictions aimed at curbing the spread of COVID-19.
The Saudis make most of its revenue from crude oil, which has dropped 33% in value this year.
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