Nigerian insurance firm to open in Botswana

Brian Benza | Friday July 18, 2014 11:20

The company this week notified the Nigerian Stock Exchange (NSE), where it has primary listing, that it has been granted a license to open a subsidiary in Gaborone.

If they move as planned, Continental will become the third reinsurance firm to operate in Botswana with FM Reinsurance and First Reinsurance being the only two firms locally.

According to a statement on the NSE, Continental Reinsurance Plc owns 60% of the shares of the new Botswana company.

“With the new company, Continental Reinsurance Plc will be able to serve all the countries existing in the South of Africa and the African Indian Ocean Islands including all SADC countries in line with its strategic direction,” said Continental.

Reinsurance is a form of insurance cover for insurance companies as it occurs when one entity takes on all or part of the risk covered under a policy issued by an insurance company in consideration of a premium payment.

The intent of reinsurance is for an insurance company to reduce the risks associated with underwritten policies by spreading risks across alternative institutions.  NBFIRA confirmed the licensing of Continental to BusinessWeek.

“Yes we licensed Botswana Reinsurance Company (Pty) Ltd which later changed names to Continental RE,” said Nbfira communication and public affairs manager, Tapologo Kwapa.

The Nigerian firm says the new Botswana subsidiary is expected to significantly boost premium income and profit of Continental Reinsurance Plc.

In its full year 2013 financial the group was able to grow its gross premium by 26% to 15bn Naira (P825 million), while net income rose by 1 percent to 1.7bn Naira (P39 million).

According to the NBFIRA 2013 annual report, the two licensed reinsurers recorded their first profits in 2012 after three years of operation.

The two firms generated a combined gross written premium of P22.5 million in 2012, which was an increase of 37 percent from the prior period of 2011.

During the period under review, total assets for reinsurers increased threefold to P38.8 million during the reporting period while total liabilities only increased by 32 percent from P12 million (2011) to P15.8 million in the same period.

The total capital for reinsurers reported a sharp growth of P23 million and this was attributable to additional capital injections and a growth in the local reinsurance capacity.