First Bank, S/African set up new mega insurance firm
WEDNESDAY, 19 MAY 2010 01:22 MODESTUS ANAESORONYE
A mega insurance company that would provide life and non-life insurance services is set to berth in the Nigerian insurance market as FBN Insurance Company Limited seals a joint venture deal with Sanlam Limited of South Africa. FBN Insurance which recently secured operational licence from the National Insurance Commission (NAICOM) will start its life insurance business in July this year while the non-life arm will commence next year, BusinessDay can reveal.
Sanlam, a major insurance player in the South African Insurance market, is taking 35 percent equity stake in FBN Insurance Company following a joint venture agreement reached by both organisations. Val Ojuma, managing director, FBN Insurance Brokers Limited, who confirmed the development to BusinessDay said this is a major breakthrough for the First Bank Group.Ojuma who may head the new life company as its managing director said beyond the financial commitment of Salam Limited as shareholders, the company will provide technical support as well as have presence in management team of the company.
He stated that the South African partners have been part of the conceptualisation process and is the view that their partnership will give the company the desired height. Fist Bank Nigeria plc before now had an insurance broking firm, FBN Insurance Brokers Limited, a major player in the insurance broking arena.
Fola Daniel, commissioner for Insurance, told BusinessDay that although the commission has been strict in granting fresh licence for insurance business, it considered the coming of Fist Bank into main stream insurance as an opportunity to grow the insurance market.
Daniel said it took the commission more than three years to arrive at this decision, having considered the situation of the market, the size of First Bank, its track record, spread, human capital availability and the fundamentals of the group.
"We believe that giving First Bank operating licence would deepen the market because it is expected that its outlets spread in the nook and crannies of the country would be used to push insurance products to the larger populace."The commission is eager to see the industry achieve market deepening and grow to our expected target, and that is why we are taking seriously the issue of projecting our Market Development and Restructuring Initiative (MDRI), brain child of the commission which is also focusing on market penetration," Daniel said.
Analysts are excited about the development, stating that although it may not seem logical licensing another insurance company now, with Fist Bank one could envisage a mega firm capable of absorbing fringe players. Sanlam was established in 1918 and is a leading financial services group in South Africa. It demutualised in 1998 and is listed on the JSE Securities Exchange in Johannesburg and on the Namibian Stock Exchange.
On 31 December, 2005 the Group had R353 billion ($2.67 trillion) in assets under management and administration. The Sanlam Group conducts its business through Sanlam Limited, the corporate head office, and four business clusters.
The corporate head office is responsible for the Group's centralised functions which include strategic direction, financial and risk management, group marketing and communications, group human resources and information technology, corporate social investment and general group services.