Insurance analysts have long insisted that there is the need to have the business of insurance penetrate the nooks and crannies of the country, and contribute meaningfully to the nation’s economic growth process. It is in that regards that stakeholders recently again raised the issues of mergers and acquisition within the industry; a move which the National Insurance Commission, NAICOM, once promised to encouraged. Insisting mergers and acquisitions remains the only way by which the insurance sector can fully penetrate the consciousness of Nigerians and also become fully appreciated as an effective business support and growth strategy, observers said also that the industry regulators should ensure it lives up to its pledge by making sure operators come together to form alliances that can drive the sector forward. Recalling that the Commissioner for Insurance, Mr. Fola Daniel, told stakeholders in the not too distant past that the commission was creating an enabling environment for mergers and acquisitions to thrive in the insurance sector, Insurance Expert, Mr. Basil Ngwuta, said that pledge by the commission was yet to be fulfilled, as many operators are still keen on running “one man shows” Ngwuta noted also that though NAICOM has said it is encouraging mergers and acquisitions in the industry in order to breed stronger firms that can underwrite bigger risks and do business professionally, that so far nothing much has been achieved in that aspect. He explained with the exception of few deals already done in mergers and acquisition that virtually all the operators have jettisoned the idea, with many focusing solely on how to consolidate on their small operations. Placing the blames and challenge of low response to mergers and acquisitions proposals within the insurance sector of the shoulders of the commission, Executive Director of City Insurance Brokers Limited, Mr. Rocky Igunbor, said the much the industry regulator can do is what it has done by creating an enabling environment to make this kind of arrangement smooth sailing. He blamed the operators, which he said includes the directors and owners of firms in the industry of drawing back the hands of the clock with their “narrow view of things”, saying the operators mainly play to the gallery, while holding on strongly to their firms own little space within the sector. Igunbor explained as much as mergers and acquisition within the industry will take insurance to greater heights in the country and the sub region, they were purely business decisions, over which NAICOM has not much say. According to him, “Local underwriters in the industry are beginning to recognise that they could not be significant players if they remained small and continued to be fringe players in the industry. For this reason, they had begun to see the need for business combination, acquisition and mergers, which were ongoing quietly in the industry”, he noted. On her part, while maintaining that investors want further mergers, acquisitions in insurance sector in Nigeria, former President of the National Council of Registered Insurance Brokers, NCRIB, Mrs. Liade Osijo, said that for the nation’s insurance industry to survive the current world economic recession, which stakeholders need for further consolidation of insurance institutions into bigger and stronger underwriting firms. According to her, with close to 100 life, non-life and reinsurance companies operating in the country, there was no doubt that figure is too large for optimal performance. That is why the commission should encourage mergers and acquisitions among operators in the industry. Making reference to the merger between Custodian & Allied Insurance Plc and Crusader Nigeria Plc, and that between African Alliance Insurance Plc with Universal Insurance Plc, as the only notable merger that took place this year, despite the encouragement from NAICOM, former Managing Director of Great Nigeria Insurance Company Plc, AlhajiSaniAbdulrahman, said such poor performance in the area of mergers was not good enough for a sector that is struggling to become more relevant. He pointed out that the acquisition by Mansard Insurance Plc of Procare Health Plan Nigeria Limited cannot be described as a full merger or acquisition, because Procare cannot be said to be a core insurance operator. According to him, “Consolidation, mergers and acquisitions have become necessary in order for the Sector to meet the new and challenging environment”. “Companies must increasingly compete globally, they must be lean and efficient, while offering an expanding array of products to ever more discerning and demanding consumers,” he noted. Abdulrahman explained mergers and acquisitions have remained viable options for insurance companies to remain in business, and that Nigeria insurance operators should quickly embrace the concept, if many of them are to remains afloat and operation in the next few years. He added limited financial and nonfinancial resources, as well as a reluctance to release information by insurance companies and other operators in the industry have prevented important steps from being recorded in making the sector stronger and more competitive through mergers and acquisitions. Director of Global Insurance Risk Brokers Limited, Chief Rufus Kupi, said he is of the opinion “ that the number of insurance companies operating in Nigeria are too many and should be reduced not by forcing any company to close-shop, but by encouraging insurance companies to come together through mergers and acquisitions”.
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