By Omoh Gabriel
Last year as a result of CBN’s directive that banks should divest from non-core banking business, GTbank divested from GTAssurance. In this discussion, the management team of GTAssurance represented by Mr. Kunle Ahmed, Divisional Director, Institutional Business and Mr. Oluwasola Fakorede, Head, Marketing & Communications explained the rationale for the divestment, the new core investors and the prospect of the new company.,
Excerpts
Why are we gathered here today? This is the first time we are meeting formally.
We want to communicate to you the latest development in our organisation. GTAssure started about eight years ago in 2003/2004, how have we fared in the last seven or eight years? In year 2010, the CBN Governor, Sanusi Lamido, in his wisdom decided to repeal the law that brought about universal banking that is one of the reasons why GT Bank divested from GTAssure not because we are not making profit for we have been adding to our bottom line.
We have to abide by the rules and regulations of the country, so, GTBank divested in October 2011, and Assure African Holdings, a consortium of foreign investors took over the shareholding of GTBank in GTAssure. GTBank had 67.68 per cent of the share of GTAssure, and this is what Assure Holding paid for; they paid about N11.9 billion, about $18 million, that is what they paid for.
Who are these investors?
Like I said earlier, it’s a consortium of five investors: FMO, DEG, Afric Invest, DPI, Augusto &Co. These are guys that are fund managers, foreign investors, and we realised the fact that what they are bringing to bear will be much better than what we had enjoyed under GTBank.
Why?
Because if you look at the kind of ratings that they have, for instance, FMO had two AA rating from Standards & Poor, the biggest rating agency in the world. I think the highest GTBank had gotten was AA-; DEG also had a triple AAA rating, so we are looking forward to benefiting from the expertise of these consortiums. One good thing that GTAssure is determined to do is to deepen insurance in Nigeria.
As at 2010, December, the penetration of insurance in Nigeria was 0.8 per cent, but we think there are opportunities for us to grow the business beyond that as a lot of Nigerians are not carrying any form of insurance, and we feel this is not right. These are the things we are focusing on –getting the buying in of the foreign investors.
What made GTAssurance attractive to these investors?
I mentioned earlier on that 2011 was interesting to us. In 2010, for the first time in its life, GTAsure produced two commercials; remember the Chairman’s commercial, the man that was in the airplane as a young professional, and those two commercials won three awards – two Gold and one bronze. And when you look at them in each category, the chief commercial won another Gold award in a bank category ahead of Ecobank and Zenith Bank; it also won another award in the image corporate category ahead of Fidelity Bank. So it was so interesting that two of our commercials won awards under the same category in one particular year.
Marketing awards: It was also held in 2011 at the Federal Palace Hotel, Victoria Island, Lagos. Interestingly, we came third out of the four insurance companies (GTAssure, AIICO, IGI and Leadway) that were rated. And we found these to be very interesting. Some few weeks ago, another top rating agency came out with its rating, and we had B in financer strengths rating and BB+ in lower credit rating. What does it say; the rating reflects our strength in risk adjustment; that we are very strong in carrying different types of risks.
We have very good business profile, and our underwriting performance is also very strong, that is to say, GTAssure as at today, can carry high level risks even in oil and gas because of these ratings.
What has been your financial record?
Interestingly, our financial performance for the period can also be attributed to our conscious efforts to growing our premium income and continued cost without compromising excellence in service. By the end of the third quarter, our Gross Premium
Income was over N8 billion, meanwhile, in 2010, we did N7.5 billion; that shows that on a continuous basis, we have been growing the business on the average of 30 per cent year on, and this is very interesting to us. Not just for GPI, we also made profit and we also paid claims. As at the end of September, we had paid about N1.1 billion claims this year, thus, showing that we are responsive to consumer demands.
Moving forward, what will be the major things that you will be doing?
You are aware that we have finished with our divestment status, but we need to do a re-branding activity that will really re-launch GTAssure. We would want to request for support from members of the media in carrying out this re-branding exercise because that will be the major thing that will define GTAssure. I always tell people that we can only tell the strength of GTAssure when we stand on our own. Either we want to believe it or not, the positivity of GTAssure is on us and by the time we re-brand and come aboard as our own brand, that is when people will be able to really say that is what we stand for. The success of that is dependent on the kind of support that we get from the Press.
As per the re-branding, are you coming out as GTAssurance or Assure Holding?
We have not really taken a decision on that. First of all, let me say we can no longer retain GTBank’s name, we have one year moratorium from the day of divestment for us to stop using “GT”. Already, with two months gone, and we have started well; we are going to take a whole haul to actually redefine our re-branding position, and we can’t say we are going to take that name Assure Holding or we are going to be coming up with a new name, but one thing I can assure you is that you will never be in the dark. Now that we are starting a relationship, you will be part of the process of re-branding activities.
What is your share of the market?
Currently, based on 2010 figures, we are aware that not all companies have released their results for 2010. Typically, we intend to release our result by the end of the first quarter. NAICOM, the regulator is trying to ensure that all the companies release their results latest by the first half of the year. Back to your question, what market share do we have? In 2010, we grossed N7.5 billion as premium income and in the industry, we are No.4 behind Leadway, AIICO and Custodian and Allied Insurance. According to all the results released, we are number four among the active insurance companies. In 2009, we were number 5, and in 2004, we were number 93, yes. We bought over an insurance company called Heritage Assurance. Heritage was a fair player in the market with a turnover of about N20 million and within five to eight years, we have turned it over and we are number four today.
Looking at your business profile, now that GTBank has divested from GTAssure, what kind of impact do you think it would have on your operation, now that you are no longer there, some of the clients you have, how disposed are they to GTAssure?
That is a very good question. People have the impression that we visibly depend on the bank’s customers; it is not very correct. GTBank has about twelve insurance companies whose securities are acceptable to them, so we don’t actually feed directly from the bank. However, in the divestment process, we actually signed an agreement with the bank, to still post our people in the branches of Guaranty Trust Bank. In the past, there was no such agreement, because they are our parents; how can you say I should sign an agreement to stay in your house? But now that we are married and we have our own home, we signed an agreement of three years renewable. That is what we have done. You will still find our people in the branches of GTBank. In the past, a couple of banks refused to do business with us because we are a subsidiary of GTBank; they said they will be fanning competition with GTBank but following the divestment, a couple of them have started doing business with us. One company to mention here is FCMB. FCMB has signed an agreement with us for us to put our people in their branches. We have our people in 20 of their branches in Lagos Island, and 10 on the Mainland; next year, we hope to go out of Lagos. Those are the new things that are going to happen and add value to our organisation. Stanbic IBTC also wants to sign agreement with us and that we find exciting. So we are safe with those banks. The only thing they cannot take away from us is the value we have inculcated in our people. If you are an apprentice and you learnt your work very well, even when you do your freedom, you will still be very close to your boss. When we did our apprentice with the bank, they mentored us for seven years; we should graduate and go and stand on our own with the values they have inculcated in us, the right way of doing business, proper segmentation of the market, the issue of integrity, the issue of corporate governance, they cannot take it away from us. Whether we go out there with a new name, those values go with us. It is those values that define the company not persons it depends on. So, we intend to continue to follow those values we have gotten from GTBank and stand on our own. We won’t have problem, especially with the support of our new investors.
How are you preparing for the adoption of International Financial Reporting Standards, IFRS?
Two months ago, we set up a committee and hired a consultant, KPMG to take us through the processes of IFRS. KPMG is our auditors as at today but we can change them after five years. The rule says you cannot use them more than five years, so, it is likely that we change them. So, we hired KPMG to take us through that process. We have important date that we assign to everything we want to do; by January 2012, we should be in the pilot room for the conversion. The rule says we must be listed on the stock exchange. Security and Exchange Commission says we must publish our first quarter result next year in compliance with IFRS and that we have complied to do. As at today, we already have a Desk that manages IFRS. Latest by the end of January, we should be se to rollout the conversion in line with IFRS guidelines.
And the issue of compulsory insurance, what products are you coming out with and how soon?
Now talking about compulsory insurance products, the products are already on ground. What government is trying to do is to ensure that people buy these products. I am aware that when you put a product together, it might not satisfy the needs of everybody because our need differs from one person to the other. What we have done at GTAssurance is to develop different products. Instead of forcing down the same products on everybody, we look at an individual and try and offer what that person really needs. For example, I cannot go to UNILAG and sell home insurance to students of UNILAG. The reason is that most of them do not have a home of their own. A few questions will reveal to me what the need of a customer is. So we scope people before we design insurance products that really satisfy their need. So we have various types of products available that meet the need of a particular customer.
Looking at the market, what would you say is your USP, unique selling proposition in the market place and how are you really making money bearing in mind “Police let me Pass Third-Party Policy” goes for N1,500? What are you doing about them?
Okay, the law says you must carry an insurance policy. The challenge for us to convert most people that are carrying Third party to Comprehensive Policy, and the only way you can convince me to carry Comprehensive is the way you treat Mr. A who carries Comprehensive when he had his claim, when he suffered a loss. That is the only way you can convince a Third Party carrier to convert to Comprehensive policy. That is why we take claims payment very seriously at GTAssurance. As at September this year, we paid over N1. 2 billion as claims and most of them are Motor claims. And in the last two months, we recorded more claims on motor vehicles probably because of accidents and many cars were stolen during the festive season. So, we have paid close to N2 billion and the greatest of the claims were on motor insurance and as a result of that, most people have really converted from Third Party to Comprehensive Insurance with us. The important thing is for car owners to insure their car and pay their premium so that when there is a claim, the insurer will not start speaking grammar to you.
What are you doing to ensure that your field officers educate prospective policy holders?
I just came from a training programme in our office at Ikeja. As I speak, our field officers are undergoing training. We train them and we try to ensure that we don’t really push them too hard to sell because it is when you have a stiff target to sell that they mis-sell. As soon as our agents make sales, we make direct contact with our customers saying: “We noticed that you bought XY product, kindly let us know if indeed this is the product you desired to buy.” So policy holders should take the pain to go through the document to ensure that what they bought is actually what they wanted. I encourage people to take a bit of care because insurance is like preserving your wealth. That is what insurance is; so that thing that preserves your wealth we need to pay more attention to it to ensure that it is indeed going to preserve your wealth. If you don’t have insurance, you suffer a lot. You have to dip hand into your savings to repair your car, but if you have a policy and you have paid a bit of your premium, the insurance company will step in and indemnify you. So we are trying to ensure that we educate the customer so that agents do not mislead or mis-sell to them. It is a process. I cannot say we are there 100 per cent. Customers who buy our product are converted to the company’s customer and not the agent’s customer. Because when you don’t have an interface with the company, you will do whatever the agents tell you. If the agent says the policy covers everything and you believe it, but when there is a claim, and the company is telling you something else, it causes dissatisfaction. Let me tell you about claims. A lot of people believe insurance companies do not pay claims. That is not true. Companies like us put claims payment in the front burner, it is sacrosanct. Give us all your documents and what we do tell customers is that within 48 hours, you will get your cheque.
Another issue is brokers, a lot of the time, money is paid to them but they don’t remit it to the insurers and at the end of the day when there is problem, you cannot find the broker..
We have fantastic, developing relationship with brokers. They control 65-70 per cent of the market depending on who is counting. Brokers are a set of people we cannot do without. Every year, we take brokers out of the country for knowledge session. April last year, we were in The Gambia with brokers from the Nigerian market and what we seek is for their understanding of our own business principles so that they can sell us and in turn, we get feedback. So it is a continuing and a growing relationship. However, some of them are dubious. That is why NAICOM is putting a regulation in place to ensure that a broker that receives money remits same to the insurer within 90 days or so. I don’t have detail in terms of the period.
How much of your business is driven by brokers?
I don’t have an accurate figure in terms of the volume. We are having a rewarding partnership with brokers. You know the regulation in the industry, for example in the oil and gas, most oil and gas contracts must be written with brokers. So there is no way we are not going to do business with them. We try to explain our business principles to them and we are having a growing relationship. We have had a couple of them come to our office and say we want to partner with you because we believe in you. That is the way to go and we are happy with the growing relationship.
In any business, whether it is kiosks, the important aspect is the people. You must have the right culture and the right people because; the business we are in is the business of cultivating relationship with people. If you have everything but do not have the right people, where will you be? The machine cannot do the job. You cannot acquire machine and say go and visit XYX and sell life insurance policy to him. The fact that we have the right people to engender the culture of service delivery and getting things done the right way and the proper way is our strength. If you talk about institutional business, we have good capital, about N12.8 billion shareholders’ fund, we are well rated by Augusto & Co A+, FMO, S&P A+, and recently we had BB for ICR, which is the highest rating for insurance industry in Nigeria. Some of our colleagues were also rated but they don’t have high rating as GTAssure. Those are the things I considered as our strength. And we will create new products that our customers will be happy with. I believe that the fact that we have the right culture and people, strong capital and we are well rated, are our strong points.
What are your challenges and your fears?
Our fear is if the middle class that supposed to buy insurance policies did not continue to grow, then it will be a challenge for us. We have started opening agency offices. This year, we opened four and we plan to open another four again to bring the total to ten agency offices in 2012. We also believe that the regulation will continue to improve. We want the regulators to shape the way insurance companies should be. We don’t have any doubt that the regulator should continue to push the industry to that direction.
When are you going to introduce Islamic Insurance?
We are working on it. We are working with a private Islamic equity firm on it and I don’t want to say so much about that now. Good enough, one of the new owners of our company is a private equity firm based in Tunisia, Afric Invest. They have expertise in the areas of Islamic Insurance. We believe that we need to serve all areas of the country profitably. It is important for you to have profit in mind when you go into business. And you give yourself a time frame to achieve that purpose.
What is your view about rate cutting?
My opinion basically is that depending on how robust your portfolio is, you can determine the rate that you will underwrite your policy; however, if you belong to a community, or an association and you have come together and agreed and you have appended your signature, you need to abide by that rule. I just came from a renewal meeting in London, and what the insurers in London told us was that there have been several claims on this side of policy this year, so the premium will increase next year. But my argument to them was, no, the claim didn’t occur in Nigeria, it occurred elsewhere. They said that everything was in portfolio including the risk I brought from Nigeria. So they put everything in the portfolio and whatever risk is determined by the portfolio. So the premium will increase slightly this year. So if an association says this is the way we are going this year, you have to abide by it.
