The Nation Newspaper

Tag: reclassification

  • Leadway supports new capital regime, reclassification

    More firms will soon be finding their voice and position as Leadway Assurance steps forward to support the introduction of the solvency requirement for insurers from January 1, next year.

    This is coming on the heels of the announcement of Tier-Based Minimum Solvency Requirement (TBMSR) regime by the regulatory authority, the National Insurance Commission (NAICOM).

    The new TBMSR will reclassify firms into Tier 1, Tier 2 and Tier 3 and ensure that they insure only risks that are commensurate with their capital.

    The development is expected to grow  industry contribution to Gross Domestic Product (GDP) from 0.3 per cent and improve its ranking within the comity of African insurers.

    Since NAICOM’s announcement, insurance firms have been thrown off balance and are still grappling with its after shock. The development has upset some firms that thought they may be extinguished form the industry.

    But two weeks after the announcement, one of the leading insurance companies, Leadway Assurance Company Limited commended the regulators for a policy, saying it is long overdue.

    Its Managing Director, Oye Hassan-Odukale, who gave the commendation following FBNInsurance Limited Managing Director, Val Ojumah’s description of some operators as fringe players while supporting the regulatory order, said solvency requirement’s introduction would help restructure the market in a way that insurers could choose, which part of the consumer segment is best served, based on the capital fund it holds or is able to deploy.

    The Leadway chief is also the Sub-Committee Chairman on Publicity and Communication for  Insurers’ Committee.

    According to Hassan-Odukale, with the restructuring, insurers do not have to be compelled to increase their capital to underwrite risks that stress their capital without delivering commensurate returns to capital providers or shareholders.

    He said the restriction would foster the emergence of players with capacity to become retail or underwriters’ specialists in critical sectors of the economy, such as the aviation and oil and gas, while accelerating the growth of the industry and its contributions to the country’s Gross Domestic Product (GDP).

    Hassaan-Odukale also expressed his confidence in the initiative. “The news of NAICOM’s introduction of TBMSR is a positive one. I am confident that it is an initiative with potential upside for the industry to grow and take its rightful position as a formidable contributor to our national economic activities, growth and development as it is in developed economies.

    “It is high time we moved beyond the 0.3 per cent contribution to GDP and improve our ranking within the comity of African insurers (heavily dominated by South Africa) as measured by the African Insurance Barometer. Overall, we should expect an improvement in the capacity and reputation of the industry on the back of unwavering market discipline, improved claims settlement, stronger local retention, increased prudence and promotion of appropriate pricing,” he said.

    He continued: “Under the new TBMSR, the minimum capital requirement which is policyholders’ surplus/shareholders’ funds for insurance companies remains as the base Tier 3 capital (N3bn for General Insurance; N2bn for Life).  Tier 3 companies are now only able to write retail insurances (micro insurance, motor, fire, agriculture, compulsory liability insurances, individual life, health and miscellaneous insurance). Tier 2 companies are required to have 150 per cent of the base capital (N4.5 for General Insurance and N3billion for Life) based on the types of risks written. Tier 2 companies can write retail insurance as prescribed under Tier 1, including commercial and industrial risks and group life assurance.

    “Tier 1 companies are ultimately required to have 300 oper cent of the base capital (N9billion for General Insurance and N6billion for Life) to write all risks including annuity and exclusively Special Risks (e.g. energy and aviation risks) which are highly capital intensive in terms of risks retained on the balance sheet of the insurer in addition to any reinsurance capital purchased. Automatically, composite companies (Life and General Insurance) at any tier only need add both sides to make up the required capital, so you will have N5billion for Tier 3, N7.5billion for Tier 2 and N15billion for Tier 1.”

    On how the TBMSR will affect insurers’ solvency margin, Hassan-Odukale added:“It is important to note that all companies already fall within each restructured tier therefore, no company needs to raise additional capital unless they have existing capital deficiency or prefer to play within a tier above its current capital level.

    “Leadway Assurance, which falls within the Tier 1 bucket has shareholders’ funds valued in excess of N40 billion compared to N15 billion required for a Tier 1 composite insurer. A number of other insurers are also within this tier. We believe this TBMSR is good for our industry as it helps to promote the financial health of insurers and, ultimately, consumer confidence.

    “Insurers are already at different levels of the tiered system. Each company will then be placed within the bucket that they already belong. Should companies now decide to play at a level higher than their current tier, the shareholders can take capital actions either by mergers or injection of new funds. With the TBMSR, insurers simply play within the limit of their solvency capacity,” he said.

    Hassan-Odukale also said unlike the previous capitalisation, no insurer is being asked to shore up capital and neither will anyone’s licence be withdrawn either, stressing that companies simply get to choose which tier they want to operate in, ensuring that they stay within their capacity so that they are able to meet the obligations of the risks that they carry.

    “If a Tier 3 company then wants to play at Tier 1 level, nothing stops them from embracing voluntary merging with other companies in order to scale up their capacity and build more formidable and globally-competitive institutions that would create value for stakeholders and investors.

    “At the end, the major difference between the three tiers will be in the nature of risks underwritten by each insurer, depending on each insurer’s current capital position. To reiterate, the choice of whether to increase capital is left to the insurer who must decide within which tier it wants to play the market as the regulator has not required any company to increase capital above the current minimum,” he added.

    Meanwhile, NAICOM will today kick off a training session with Board members of all the companies. The Commission, which planned to transit to the new capital regime, is preparing the Board for smooth transition.

    Commissioner for Insurance, Mohammed Kari said the Commission said the training would create awareness for the Board and enable them make proper decision going forward. He said after the training, the Boards are expected to take a decision on their choice to either be a Tier 1, Tier 2 or Tier 3 player not later than September 14.

  • Stockbrokers get NSE’s January 30 deadline for reclassification

    Stockbrokers get NSE’s January 30 deadline for reclassification

    The Nigerian Stock Exchange (NSE) has directed all stockbroking firms to perfect their status by January 30, next year to align the firms’ capital and  capacity with their roles in the stock market.

    In a circular to all its dealing members at the weekend, the Exchange directed  the firms that seek to reclassify their registered functions to complete the process on or before January 30 deadline.

    Under reclassification, stockbroking firms are expected to choose from the four categories of operations including broker-dealer, the highest level; broker, the second level; dealer, the intermediate level and sub-broker, the lowest level similar to investment agent without any trading privileges.

    The reclassification is in furtherance of the implementation of the Minimum Operating Standards (MOS) of the Exchange, which became effective on January 1, this year and the new minimum capital base stipulated by the Securities and Exchange Commission (SEC). With the expiration of the September 30, this year deadline for compliance with the new minimum capital base, SEC is compiling the final list of compliant capital market operators.

    The MOS requirements relate to all the dealing members of the Exchange and they address the five broad areas of manpower and equipment; organisational structure and governance; effective processes; global competitiveness; and technology.

    “Note that the deadline for completing the reclassification process is 30 January 2016. Trading access would be denied to firms that fail to conclude the reclassification process before the deadline,” the NSE stated.

    At the last count, no fewer than 36 stockbroking firms were undergoing reclassification of their functions, mainly reduction of functions to meet the new minimum capital base and the MOS.

    These included Alangrange Securities Ltd,  Standard Alliance Capital & Asset Management Ltd, Anchorage Securities And Finance Ltd, BGL Securities Limited, Boaz Management & Fin. Strategies Ltd, Camry Securities Ltd, Century Securities Limited, Citi Investment Capital Limited, Clearview Investments Co. Ltd, DBSL Securities Ltd, Express Portfolio Services Ltd, First Alstate Securities Limited, FIS Securities Ltd, Flourish Securities Investment & Trust Limited and G.G Securities & Investment Ltd.

    Others were Investment Centre Ltd, Investment Shark & Asset Management Ltd, LB Securities Limited, Mainland Trust Ltd, Marriot Securities & Investment Co. Ltd, Mayfield Investments Ltd, Mission Securities Ltd , Mountain Investment and Securities Ltd, Northbridge Investment & Trust Limited, Professional Stockbrokers Limited, Redasel Investment Ltd, Regency Financing Limited, Shalom Investment Financial Services Ltd, Stronghold Investment Ltd, Surport Services Limited, Tfs Securities & Investment Company Ltd, Transafrica Financial Services Ltd, Transworld Investment & Securities Ltd, UIDC Securities Ltd, Yuderb Investment & Securities Ltd and Woodland Capital Market Plc.

  • ‘Our literacy level has improved’

    ‘Our literacy level has improved’

    The reclassification of schools in Osun State has led to an improvement in the literacy level in the state according to the permanent secretary, Ministry of Education, Oyelade Oyeniyi

    Is school reclassification the only way to reform education in the state?

    When we had our education summit, reclassification was one of the cardinal recommendations of that summit. We have engaged various stakeholders and came up with the grade system against the former primary system. This allows for effective management of resources, where we had more teachers than students, the grade system has rectified that. The grade system is also the global trend and we ensure that it matches UNESCO recommendations.

    When the schools were merged, what criteria were used to select students?

    We didn’t use a single point. The policy is, there is no single sex school in the state, we moved 1,920 students from Fakunle Grammar School to the former Baptist Girls High School, which is a stone throw from each other. We considered the land mass of the school, the nearness to the student’s residences. We considered the logistics and the furniture available in the schools, the year of establishment. We did our homework well in fixing students into a particular school. For the elementary, it’s all in the neighbo-urhood and for high schools, we have purchased school buses to be used solely by students, so it was very tight and we have no problem.

    What are the facilities on the ground now to accommodate this gigantic dream?

    We have gone really far in that. We plan to build 170 schools, 100 will be elementary, 50 will be middle and 20 will be high schools. Where we will not build new schools, government will upgrade existing infrastructure. We have about 40 new schools now and many are under construction. There will be six high schools in Osogbo and they are under construction now, Fakunle will be in Unity road. It is under construction.

    There are so many issues about insensitivity to religion in the reclassification exercise.

    No, religion is not against reclassification because we don’t want to set any religious tension, we took cognisance of that and all the stakeholders were carried along. When schools were taken over by government, it didn’t classify any school as religious. But what we are doing will not affect religion, all the schools retained their names like The Salvation Army and AUD schools.

    What have all these done for educational standards, because this was the primary reason for the reforms?

    Our literacy level has improved. Osun has the highest elementary school enrolment because of the O’Meal. We are meeting and breaking standards and a model for many countries. Opon-Imo has also changed the way our students read and we believe that our educational standards cannot remain the same.

  • Osun schools’ reclassification here to stay

    SIR: My attention has been drawn to a comment by Mr. Iyiola Omisore calling on the Governor of Osun, Ogbeni Rauf Aregbesola to reverse the schools reclassification exercise recently implemented by the administration.

    Omisore has yet again displayed a crass ignorance of the kind of surgical operation needed in the education sector to reverse the years of rot and decadence under the erstwhile PDP administration in the state. Seven and a half years of PDP governance left the education sector comatose, with heavily dilapidated infrastructure, highly demoralized teachers and a quality of teaching so poor that only three percent of the pupils could earn enough credits in their final examination to proceed to tertiary education.

    Omisore was part and parcel of a discredited administration that neglected education in the state and is now unashamedly criticizing a revival process that was transparently planned and implemented and is already very well imbibed by parents, students and teachers as well as well-meaning citizens with a genuine desire to uplift education in the state. A planning committee personally supervised by Governor Aregbesola worked flat-out for six months, making consultations at the state and local government levels, and preparing the logistics necessary for a successful implementation.  Omisore’s allegation that the implementation of the reclassification exercise was not thought through is laughable to say the least.

    There were post-implementation challenges which have been largely resolved excepting the shallow concerns of self-serving politicians. We deliberately chose not to be distracted by those who think education is game for cheap politicking.  I have gone round schools and happy to see teachers and students well settled into the new system. Reclassification has begun to yield very positive results and it is here to stay. The likes of Omisore should look for something else to politicise.

    •Isiaka Ayodele Owoade (PhD)

    Osun Schools Reclassification Committee, Osogbo

  • Osun school reclassification: Aregbesola’s aide pleads for understanding

    Osun school reclassification: Aregbesola’s aide pleads for understanding

    he Senior Special Assistant to Governor Rauf Aregbesola of Osun State on General Matters, Mr Kareem Olajoku, has appealed to the people of the state not to misinterpret the good intention of the government to reclassify the school system, which he emphasised, was aimed at the sound and qualitative education delivery.

    Olajoku, who is in charge of the state’s calisthenics programme, said his interaction with the schools since he was appointed to coordinate the programme has revealed the rot and decay in the education system in the state; a development he linked to the long years of abandonment of the sector by successive governments.

    He added that the newly introduced education policies of Aregbesola such as the provision of free meal and school uniforms; increase in allocation to schools, reduction in tuition fees, payment of West African Examinations Council (WAEC) fees and the distribution of computer tablets to students, are all geared towards changing the status quo ante.

    He, however, commended the people for raising questions where necessary, saying their action could only strengthen the belief and commitment of the administration to carry the public along in its programmes and policies.

    “We must emphasise the fact that things cannot just continue the way they used to be,” Olajoku stated in a statement.

    “Change is the most constant thing in life and until we are ready to be part of the change the challenges facing Nigerians would not be addressed. We have run a system for years and it did not change things, rather, what we continued to witness is mass failure, cases of dropouts, teachers’ poor performance, among others. That is not too good for a nation willing to be among the best 20 economies in the world by the year 2020.

    “We will therefore appeal to the good people of Osun State not to be distracted by some religious sentiments because our desire to deliver good and qualitative education to our people is more resolute.

    “Religion or ethnic sentiment shouldn’t be the basis of our disagreement; rather let’s be objective in our analysis.What this administration has invested in the education sector is already yielding good results such as increase in enrolment, better performance in external examination, among others. What we need do is to consolidate by providing conducive teaching and learning environment for both the pupils and the teachers,” he added.

  • On reclassification of Osun’s schools

    SIR: Since the government in Osun State announced its reclassification and school-merging policy with the commissioning of Salvation Army Middle School at Osogbo, different shades of opinion have been served through varied portals of information. While few are constructive and instructive, a few others are disappointingly banal and incredibly superficial.

    It grieves the heart that religious bodies like Baptist and the Christian Association of Nigeria (both the state and national executives) are the ones leading the pack of those cutting their noses to spite their face with regard to the school reclassification in Osun. From what I gather, the tuneless refrain in their worrisomely insular rhyme is that Christian schools are more (and should be) preferable to public schools. As if that is not enough a reprehensible stance, the Church and its colluding partners still go about claiming that schools staffed and maintained by public funds is theirs.

    In case they have forgotten, the Baptist people and CAN must be reminded that the schools they are now claiming ownership of ceased to be theirs from the time government took them over in 1975 and duly compensated the church. It smacks of irresponsibility to hear that a body which does not own public schools is putting up all kinds of reproachable and un-Christian histrionics in a bid to strictly determine how they are administered It is objectionable that the leaderships of the Baptist Church and CAN are zealously crusading for Christian schools in Osun. Where the people of Osun are happy that public schools are now becoming effective and well-structured, the Baptist leaders are bitterly mourning the loss of moribund Christian schools.

    I think the larger Christian community in Nigeria would be more grateful to CAN and the Baptist Church if they can channel their mounting energies into the rising killing of Christians by dangerous Islamic sect, Boko Haram, in the North-eastern region of the country. I am convinced that these bodies are largely mistaken, hence the wrong campaign they are putting up. Their claim of ‘Islamization agenda’ appears to me to be the waffle of a person who has no point worth anybody’s attention to make. Certainly, these bodies by their claims continue to convince the searching mind that the school reclassification policy in Osun is not inimical to the development of public education.

    The impression of crisis in Osun that the leaders of these Christian bodies give in the media exists primarily only in their imagination. For instance, the pupils of the merged schools relate robustly well with one another. If ever they are worried, it is simply on why the Baptist Church and CAN are whooping so abysmally on a policy that enriches the fortunes of public education.

    • Gbenga Iluyomade,

    Ede, Osun State.