Reinsurance is a major driver of the insurance sector; it in fact may be the strongest pillar through which a country?s financial sector depends on for stability. In Botswana, the reinsurance industry is gradually growing to provide a mechanism through which?insurance companies in the economy can transfer risks to reinsurance companies locally. With this development, the reinsurance industry in Botswana has ushered in a new player, First Reinsurance company (First Re), a subsidiary of Emeritus International Reinsurance Company (Emeritus Re). The Emeritus Re has operations in Zambia, Malawi, South Africa, Mozambique and recently in Botswana. Emeritus Re comes to the market with the necessary expertise to increase the underwriting capacity of this industry. This will curb the outflow of foreign currency from Botswana.? In an interview with the Economic Insight, Emeritus Re Group Chief Executive Officer (GCEO), Mr. Leo Huvaya had this to say:
EI: What led to the inception of Emeritus Re in Botswana?
The company considered setting up in Botswana due to the effect of negative growth and lack of new capital in Zimbabwe at that time. Botswana was the right place to establish our head office due to its socio-economic stability and high sovereign rating. This has the potential of positively impacting on our company?s rating and ability to raise additional capital for further expansion. The IFSC off-shore location has the distinct added bonus of removing the huge double taxation burden that was costly to our business.
EI: What has been your experience as a reinsurance company operating across Africa
Despite the perception that doing business in Africa is costly and not profitable, Emeritus Re has been able to spot opportunities and take advantage of them across the continent. The strategies we have employed in running Emeritus Re have played a major role in seeing the company through different hurdles. For example, Mozambique Re (MozRe) which is a subsidiary of Emeritus Re, has grown significantly with the setting up of the first reinsurance company in that country. MozRe has been so profitable that within three years of operations,?? we are getting a dividend. This is a rare experience as in most cases it takes at least five years before a new reinsurance company declares a dividend to its shareholders.
EI: The business environment has its own challenges, what challenges are faced by Emeritus Reinsurance Company and what interventions are you putting forward to overcome them?
Like any business, Emeritus Re has faced its own share of challenges. Our most challenging experience was when one of the subsidiary companies, Southern Re, based in South Africa went under curatorship in 2004. The curatorship was however lifted by the authorities on 23 March 2010.
We have since recapitalized and rebranded the company in order to strengthen and position it better to provide an avenue of recapturing the huge and attractive South African market.
Credit control is also another challenge which all reinsurers in sub-saharan region are facing. This is due to the slow rate at which money moves between brokers and insurance companies before reaching the reinsurance companies. Nevertheless, we have confidence with the positive developments taking place in the financial sectors in different countries. In Malawi, the regulatory authorities have passed legislation which ensures fast and efficient movement of premium from the insured direct to the insurer. The insurance company is in turn expected to pay the reinsurer and broker within five working days. Zambian market is in the process of passing similar laws. In Botswana, we are optimistic that the coming of NBFIRA is a plus to the industry and the entire financial sector. We are sure that credit control problems are going to be minimized through their tight monitoring and supervision.
Foreign currency risk affects all reinsurance companies because reinsurance business by nature is international and involves many cross border sharing of insurance risks. Emeritus Re has developed many strategies of mitigate these exposures. These include strong treasury functions at head office, faster collection of outstanding premium, and conversion of premium from weaker currencies to stronger currencies like the Pula.
EI: Emeritus hopes to be a leader in the reinsurance industry in SADC and EA, how are you positioning yourself to make this possible?
Strategic Planning is an aspect that supports business stability and growth. Emeritus International Re-insurance Company is indeed focused on becoming a market leader in the reinsurance industry in Africa. As such the company is implementing a model that will see it capture a greater scope of the African market. The company is in the process of raising additional capital to strengthen the balance sheet, expand and consolidate its presence in the Southern Africa market. We are also looking for expansion into the Eastern Africa Community. This will be facilitated through a management contract that Emeritus Re has secured to form a reinsurance company in a large and growing East African country. Though the company has some strategic investments in Nigeria, Emeritus Re is currently? focusing on strengthening operations in Southern Africa and Eastern Africa before rolling out major services in the western parts of Africa.
EI: The Company operates in different countries, how do you manage business to ensure that your clients get the best from Emeritus Re?
With operations running across the African continent, Emeritus Re has well developed and refined structures and policies which ensure that corporate governance is strictly observed within the entire group. On the ground, we have highly skilled and qualified experts who run operations in all the countries in which we operate. Furthermore, as the GCEO, I sit on all the subsidiaries boards, so I know what happens in all areas. The company?s systems and structure are implemented in all subsidiaries as a way of facilitating consistency in operations throughout the continent. All this is backed by one of the most advanced reinsurance operating IT system in the world called SicsNT, which has been used by the group for more than 10 years.? For sustainable effectiveness and efficiency, the Emeritus Re Group attends yearly user conferences run by the Swiss systems developer with an aim of gaining information on the technological developments made in the systems.
EI: Emeritus Re is hoping to list at the BSE what is the company?s future prospects based on this development?
The Emeritus Group is definitely set to conquer the African markets, especially given the new capital being raised. We see opportunities in areas where others do not perceive them.? Hence in all the markets where we are physically based, we have the first mover advantages.? Since we were the first to open reinsurance doors in Malawi, Zambia, Mozambique and Botswana, we will be the first reinsurer to raise capital and list in Botswana. Emeritus Re wants to bring locals on board to invest in the company. Emeritus Re wants to empower locals in the various countries in which we operate, we want them to be part and parcel of the Group; after all we are what we are because of the society.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.