The Managing Director of International Energy Insurance Plc, Mr. Peter Irene, leads a team that was sent by the National Insurance Commission to rescue the oil and gas insurance company. Irene talks on the changes made by his team and other issues in the insurance industry. He spoke to Ebere Nwoji
Can you please tell us about your professional background?
I am a chartered accountant by profession as well as a chartered insurer. I actually started my career in insurance in 1978, with Phoenix of Nigeria Insurance as a senior staff member but the company has now been acquired by Royal Exchange Assurance .I spent more than 20 years there, then moved to Union Assurance as a pioneer staff member and left as Executive Director Finance and Admin before coming to IEI. So I have spent over 35 years now in insurance .
I equally spent some years in the manufacturing sector having worked with some manufacturing companies. I have double portfolio anywhere. I am a chartered accountant and a chartered insurer. Because of my professional double barrel qualification, I am able to understand insurance more than many of my colleagues in the industry. Sometimes, core insurance professionals don’t really care about finance but finance is the soul of any business be it banking, insurance and what have you. So, I am technically sound and also know much about accounting and it has been helping me.
Let’s talk about insurance business this year. What was the performance of your company in the first quarter of the year like?
Well, for the industry, I cannot tell the experience. The figures are being collated and most insurance firms have not published what they have, but from the experience we are having here, it is not so bad. We are meeting our budget between 60 and 80 per cent. So by the time the figures are collated, we will be in position to know the industry’s performance. But I think the government is helping us now, recently, President Muhammadu Buhari issued a directive to government parastatals and MDAs to try and insure their properties in accordance with Insurance Act And am sure with that directive, the insurance industry will benefit. But a major problem to the industry and to the economy in general is non-enforcement of compulsory insurances. Recently, we heard stories of houses collapsing and people who lost their lives in the incidents. But the law says that it is compulsory for the builders of such structures to insure them.
If the laws have been taken seriously, apart from compensating the victims, it wouldn’t have happened at all because the government agency in charge will make sure the structures are properly supervised but people are not complying with the laws. They take laws into their hands, most compulsory insurances, even motor insurance, is not complied with by Nigerians. They prefer to take fake insurance but I think the NIA is handling that.
It is high time people should know the value of insurance because insurance is the heart of every economy and that is the problem we have in Nigeria today, because people are not taking insurance into consideration, we cannot save for the rainy day. You see celebrities, their houses were burnt and they went to government asking government to compensate them, is government insurance company? See NYSC , see their candidates being killed in the course of carrying out their primary assignments, even the public doesn’t know about insurance. NYSC supposed to make insurance arrangement for corps members and parents themselves don’t want to insure the lives of their children. If NYSC had from, its inception in 1973, built insurance arrangement into its system, by now, corps members would be entitled to free medical treatment because a lot of funds would have been accumulated. See the candidates that died and those that sustained injuries, the Director General only went there to condole with the families and perhaps made presentation of a token. That is not what is required and it doesn’t pay the family.
But with little amount, may be N5000 contributed by the NYSC on behalf of the members or ask parents to pay for it, after all, they ask them to pay for their children’s registration so why not ask them to pay for insurance and the parents themselves don’t want to pay so the candidates suffer. But generally, people don’t want to hear about insurance.
So , are you saying NYSC should arrange for insurance package for the corps members?
Yes, because of the insecurity in the country. They can come up with a policy that can cover everything like personal accident, when somebody is dead, it is even better than when you are permanently disabled. You can imagine, a young man or a woman that has just left school to become permanently disabled, you know what it means. I saw some of the ugly pictures of NYSC members that were involved in the last political incident that happened recently. If every Corps member contributes N5000, per annum, am sure with their number, insurance companies will be able to cover them because insurance has to do with volume or number. The parents themselves, always say “no we don’t want insurance but when something happens you will know that N5000 is nothing.
In my own thinking, it is the duty of government to arrange for their insurance cover during the service year not the parents since they are working for government, or don’t you think so?
Actually it should be the duty of government but look at it this way, recently, intending NYSC members were asked to pay N4000 for registration, if government cannot pay for registration, is it insurance? Somebody is asking you to come and serve and you are asked to pay money for registration. Ideally, in a more civilised society, government supposed to arrange for their insurance,but you know in Nigeria, you have to contribute to everything.
This takes us to the question on the much argued devaluation or not of naira. As a professional accountant and chartered insurer, are you for or against naira devaluation?
Well, nobody can be certain. Both have advantages and disadvantages. As you rightly mentioned, foreign investors are leaving because they are not sure the money they brought here whether they can take it back or not. To me, since we are running a market economy, I think I tend to support that we should devalue because if you don’t, you discover that certain things are suffering. Because we are running a market economy. See the way the value of stocks has fallen and foreign investors are going. I am sure if you devalue, it will not be up to N320. I am sure if dollar is N250, foreign investors will come back because they will be sure the foreign exchange risk will not be too much.
But on the other hand, just as people from the other side are saying, if you devalue, you will punish other people but the problem is that a lot of money has been stolen from this country and people are waiting to release the money once it moves to N 1.00 to a dollar. So we have to balance it. If oil price improves, am sure there will be no need for devaluation but if it continues to go down, then we will have no option than to devalue.
So they are holding on, but the truth is that we have already devalued because for anything we are buying now, we are using the fair price of dollar. If you are depending on the official price, you cannot make profit, you won’t even get it. If you devalue to an extent, at a time, it will fluctuate and the prices will come down on their own. Again, if you devalue, prices of things will increase and the demand will also decrease because people will not be able to buy and the prices may go down. It is just a question of demand and supply.
I think government is much afraid of inflation that may follow the proposed devaluation Or don’t you think devaluation will put inflation on the rise?
Well, in a market economy, there will always be inflation. Some years ago, how much was a tin of milk? I mean when we were in secondary school, and how much is it now. Then, when you were given five shillings, you will buy a lot of things, but now,where are we? With that, what can you buy now.
It must always be like that .The only thing is that in third world countries, inflation is much higher. I can remember that in the 80’s when I was doing my professional exams,(ACCA)with N600,you can go for shopping in UK, then, a pound was equivalent to one naira not dollar. The dollar was less than 50 kobo. But it cannot come to that again because we too are not honest. You can imagine people going abroad with very huge amount. We are also not very honest. Many Nigerians are too ambitious, they want to subvert the system, they want to have everything.
Again is the issue of consumption of local production. Local consumption too is low. But myself, I don’t consume foreign rice again. They are not even good. Last week, the rice I always bring from my place finished and I bought a bag of foreign rice , once you test the one we cultivate here and test the foreign one, you will see a big difference. The foreign one is not as good as the one you bring from village. But our people prefer foreign things.
But what I found out is that our young people don’t want to work. They prefer to sit down and wait for government’s money. Sitting down waiting for alert, they are no longer working. We should improve productivity in order to save the naira. Why are we importing rice, you think Americans will come to Nigeria and start importing rice, we have a lot of land in the north we can use for rice farming we even have them in the South so everybody should learn to be productive.
Let us tell people the elementary meaning of devaluation, what does it actually mean to devalue the naira against dollar or any other currency?
Devaluation is the amount of naira that can buy one dollar. For example, If you can use less naira to buy more dollar , it means that naira has increased. For example, if you use N200 to buy one dollar today, then next time you use N300 to buy, it means naira has devalued, then if you use N200 to buy and next time, you use N150, it means naira has increased.
Let’s come to IEI. The board of the company was suspended by NAICOM because of some corporate governance issues and currently the commission is working to reposition the company and that is why the commission sent you here, where are we now, I mean at what stage are you in carrying out this assignment?
Well. Where we are is that we have finished the major work here .Our major job was to do a forensic audit and report to NAICOM. We have done the first phase of it and we gave them a preliminary report and we submitted another report. We gave them another final report again, the fall out of those ones is where we are now. When we came here, we actually met a lot of corporate governance problems on ground. For example, when we came, 2013 account was not approved. It was submitted but not approved by NAICOM, 2013, 2014 and 2015.
But as am talking to you today, they have approved 2013 and it is published, 2014 account, has also been approved by NAICOM and 2015 for the first time, you know due to corporate governance issue, auditors of the companies often come every July, whereas this is a quoted company that supposed to submit its account by March 1. For instance, in 2014, auditors did not come until July because I interviewed the auditors. But under this administration, by first of February, we have invited our auditors because we have stable board and they have completed their audit and by next week, we will be able to submit that is 2015 account.
Well within the period, because of some issues on ground, our intention was to make sure we beat t the 1st of March deadline. If we are still here by next year, our plan is to ensure that by 1st of March, we would have published our account. So, I think to that extent, we have done a lot of things. We have done some reorganisation, Abuja for example. We have merged two branches in Port Harcourt too, we are moving staff around, training them.
We emphasise on training because what I learnt when we came here was that there was no training. Where it was done, it was haphazardly done. You know there is nothing you can do if you don’t train your staff. But here, in finance department for example, there was a lot of deficiencies because the problems we met on ground was mainly financial in nature not technical. Even the technical aspect, we have to deal with them trying to streamline.
Trying to put polices in place and change some policies because without policy, people will behave as they like. I think we have done a lot generally. We have gone far in reviving the company even though we are losing some businesses, the company is a very good brand, people like to deal with us to my surprises. The company was having more than N12 billion share holders’ fund but because of the quarrels that erupted, it went down and we are here to find out the cause of the problem.
So when do you think you will complete your assignment here?
Well, I can’t give you a specific date .We just came back from NAICOM and the commission said it will get back to us after submitting some of the reports . What we are here to do is to stabilise and hand over the company to them. They will decide whether to hand it over to shareholders to recapitalise or otherwise.
In the area of oil and gas which the company said is it has strength, from what you saw on ground, do you think they are really on ground?
IEI is still a force to reckon with in oil and gas business. When we came, we were able to pay a claim from Niger Delta and we paid a claim of $1.3 million. People thought we will not be able to pay but we paid. We are getting more businesses from power stations and all that. We paid most of the claims when we came in last year .We visited the businesses and they are still under our cover, we have the backing of our oversea reinsurers though we don’t have an existing treaty now. But we will do so as soon as the need arises.
What is the place of IEI in micro insurance?
Yes, we are there because hardly can any firm survive without micro insurance. We have been trying in that area, recently we submitted documents so that we can be fully recognised to do micro insurance. Nobody can actually succeed in insurance business today without micro insurance especially with the cellphone. There are so many things we are doing, we have a product with NAICOM that we will sell through the cell phone. Although other companies have been there but our own will be unique. I don’t want to disclose everything to the public now.
So how can you rate yourself, I mean the current position of your company, IEI in the market?
We are number one before the problem started, we were having the best personnel. Even with the problem, we are among the first five in terms of human resources and otherwise.