'Banks' Size No Threat to Fidelity Guarantee'
Insurance
By Nnamdi Duru
The Managing Director of Nicon Insurance Corporation, Ms. Pris-ca Soares, has assured of the capacity of local underwriters to provide fidelity guarantee covers even at the prescribed N25 billion minimum capitalisation for banks operating in the country.
She said the ability to provide cover for a risk has nothing to do with the size of a bank.
Fielding questions from newsmen at the "2004 NICON/Brokers' Forum" in Lagos last week, Soares maintained that insurers were no longer under threat of acquisition by banks as most of them are now preoccupied with how to meet the new capitalisation.
Reacting to the view that it will not be fair on the banks for a N200 million capitalised underwriter to provide cover for a bank with a capital of N25 billion, she said that fidelity guarantee had nothing to do with the size of a bank except if the bank is so big that it will move large sums of money all the time.
"Fidelity insurance does not have to do with how big a bank is. It has to do with how much money it is carrying unless of course, the bank is very big and may be it is carrying a lot of money", she said.
Soares then assured on the capacity of local underwriters to meet the fidelity guarantee expectations of Nigerian banks saying, "whatever the size, we are up to the task. We have policies in place, we also have big and strong insurance companies. Many of them are much bigger than they were before. So I believe that the insurance industry is up to task".
The NICON boss also deliberated on the fear that banks would acquire more insurance companies saying, "right now if banks have to beef up their capital base, I don't thing their focus will be on acquisition of insurance companies. I think they will need to face that challenge before them, recapitalising and I think it is only then that they can start looking elsewhere. But now their main focus should be on how to get to that limit presceibed for them".
On the fear that the National Insurance Commission (NAICOM) might be raising the minimum capital requirements of insurance companies in response to the recent increase in banks' capitalisation, she stated her believe that it might not be coming too soon. If it does, she said insurers have to live with it for good.
"You know that we have just finished our recapitalisation, I don't think, considering that we have only just concluded that exercise, that very shortly there will be an imposition of a new minimum capital requirement but if that happens, it is something we will have to live with because it will only be for the better with a view to having stronger companies operating in the industry.
"So I don't thing it is something we should be scared about, I don't think it is going to come immediately but if it does come, we will have to plan towards that", Soares stated.
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