…Karuaihe-Martin reflects on satisfactory 2017 and 2018 aspirations
HAVING declared a dividend of N$5 million to its shareholder, the government, this week, the Namibia National Reinsurance Corporation (NamibRe) reiterates its commitment to provide excellent service to its clients (insurance companies), add value to the industry and meet its obligations to its shareholder.
Of note and for the financial year ended 31 March 2017, NamibRe’s dividend was 23 percent of the net profits. This brings the total dividend amount declared by the Corporation to the Shareholder from the year 2014 to 2017 to N$12.3 million.
Essentially to find out more, Confidente’s Business Editor, Hilary Mare (HM), caught up with the Managing Director of NamibRe, Patty Karuaihe-Martin (PKM) who shared the Corporation’s aspirations for the year 2018 among other key insights:
HM: In the face of economic headwinds, are you satisfied with the performance of Namibre in this previous financial year?
PKM: The performance of the Corporation was satisfactory (taking into account the current economic conditions) during the financial year ended 31st March 2017 (Annual Turnover: N$307 million (2017), and Net Profit before tax: N$30 million (2017). This is in line with the financial performance of the Corporation for the past three years as the Corporation managed to double its annual turnover from N$170 million recorded in the 2015 FY while its profit before tax stood at N$14 million. When one compares the Corporation’s performance to that of other insurance market and State Owned Enterprises (SOEs) and to the prevailing economic conditions, we are satisfied with the performance. However, as a Corporate entity we must always strive to achieve maximum performance in order to maximize shareholder value and returns.
Over the years we have witnessed a gradual and sustained increase in the dividend amount declared to our shareholder (2014: N$1.8 million, 2015: N$2 million; 2016: N$3.5 million and 2017: N$5 million). This means that NamibRe is performing as per the expectation of the shareholder and more often than not exceeds that performance. Accordingly, the Corporation reiterates its commitment to the Shareholder to continue to perform and declare dividends as per the Act and the Dividend policy.
HM: How does the body seek to improve the delivery of its mandate going forward?
PKM: NamibRe was created to provide professional reinsurance services to the local insurance market, curb capital outflow to external markets develop unique Namibian products and undertake capacity development in the industry. In order to do this, the Corporation needs a strong balance sheet. The corporation identified key strategic objectives it needs to undertake so as to position itself as a trusted business partner and leader in the Namibian reinsurance industry. These include reducing the time it takes to process/paying claims; working on a 24 hours turnaround time to respond to client queries; assist industry in developing new products that are tailored for the Namibian market and providing capacity to the insurance sector so as to retain more premiums in the country.
HM: I understand there is a court case regarding mandatory cession with 12 insurance firms. Are you optimistic that Namibre will prevail in its bid to raise more finance through this measure that is being challenged?
PKM: While taking note of the on-going litigation against the Government, the Corporation continues to pursue its strategic objectives. This entails that the Corporation writes business in line with legal framework prevailing in the Republic of Namibia. This entails ensuring that the gazetted notices are implemented come 1 July 2018. Until such time that the notices are challenged and withdrawn, there is an expectation for all the players in the industry to abide by them. In future, we are positive on the performance of the Corporation. However, it is important to note that the Corporation will also participate equally in taking on the risk for the premium it is writing.
HM: 2017 was a tough year even in the insurance and re-insurance cannot be excluded. What kind of a year are you looking forward to?
PKM: Reinsurance operates on the basis of following on the fortunes of the insurance industry. The year 2017 was indeed a tough year for the local as well as the global economy. The Corporation also experienced a tough year given the withdrawal of the notices which were gazetted in November 2016 and subsequently withdrawn in February 2017. There was indeed an impact on our overall gross premiums; however, we remain optimistic that our results will be favorable. This is attributed to the fact that the business of the Corporation is run on solid business principles and as such has a good reputation in the industry, both local and internationally.
HM: In your view, do you think Namibia can accommodate other reinsurance providers in future?
PKM: At the moment Namibia is a closed market. However, there is an opportunity if the local market can promote local reinsurance underwriting capacity which promotes exhaustion of local capacity before placing the business outside. For instance, in Kenya all the life premiums generated locally are placed with local reinsurance companies registered in that Jurisdiction. In Botswana, the Act of parliament was passed in 2013 where all reinsurance placements outside the country were prohibited before local capacity was exhausted. To this end, Botswana now has three reinsurance companies domiciled in Botswana. This has resulted in the country saving a substantial amount of foreign currency that could have been placed outside the country in the form of reinsurance premiums. It should be noted that the NamibRe Act provides for the right of first refusal, giving the Corporation the opportunity to participate in business before such business is offered to another reinsurance company.
HM: In conclusion, can you share some of your key initiatives?
PKM: NamibRe has a clear mandate as stipulated in the establishing Act. As a state reinsurer, NamibRe will prioritise efficient service delivery to its clients and develop products that are unique to the Namibian market in line with Namibian culture. In any case, we believe the best underwriters for risks that are unique to the Namibian culture are best written by Namibians themselves. NamibRe will and is promoting insurance education in the country in the form of provision of bursaries to Namibian students. NamibRe, in collaboration with its partners, further contributes to the skills development in the industry by providing training to those employed in the sector in areas of insurance/reinsurance.
NamibRe, as part of its strategy is partnering with higher institutions of learning to promote and equip Namibians with rare insurance skills such as insurance, risk management and actuarial science. The Corporation provides employment to Namibians and through its internship programmes the Corporation will in future employ and train more people and deploy them into the local industry, thereby empowering Namibians in the financial services sector. We also borrowed a leaf from the Central Bank which invested heavily in skills training. Today, many of the Executives working in commercial banks worked and were trained by the Central Bank.
It is also important that there is an outcry that SOEs must perform. At NamibRe we can proudly say that we have achieved this. The main aspect that allows us to do so is that we operate the business on key business principles in return for risk invested. Accordingly, we have ensured that our Shareholder receives a return on investment in the form of a dividend. We look forward to continuing to deliver positive results to the Namibian economy and country as a whole.
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