Continental Re of Nigeria to tap East African oil business
Continental Reinsurance Plc, a Nigerian reinsurer, plans to tap East Africa's oil and gas industries as it seeks to grow revenue outside its home market, the head of the company's Kenyan unit said.
The company has begun providing reinsurance for businesses involved in exploration as it prepares to offer products when oil and gas production begins in Uganda, Tanzania and Kenya, Calisto Ogaye, managing director of Continental's Kenyan unit, said in an interview on July 15 in the capital, Nairobi.
'So far we have made contact with underwriters in the Kenyan, Ugandan and Tanzania markets and we've elicited a lot of interest,' Ogaye said.
Continental, based in Lagos, Nigeria, plans to increase the share of revenue generated by operations outside Nigeria to 60 percent by 2015 from 35 percent last year, according to Managing Director Femi Oyetunji. In 2011, the company posted gross premiums of $77.6 million, about 10 percent of which was generated by oil and gas reinsurance in Nigeria, he said.
Uganda has an estimated 3.5 billion barrels of oil and is expected to start small-scale production next year, while Tanzania is already producing 102 million cubic feet of natural gas per day and has confirmed 40.8 trillion cubic feet of reserves. Kenya has discovered crude in its northern regions and production may begin in six years, according to the International Monetary Fund.
Continental is providing training to other insurers in the three East African countries to help improve their technical capacity, Ogaye said.
Africa's reinsurance industry generates $6.24 billion a year in premium income, according to the Douala, Cameroon-based African Reinsurance Organization. There are currently 35 reinsurance companies based on the continent, according to its website.
Continental expects to report a 30 percent increase in premium income in the six months through June, Oyetunji said.
'We have seen very strong growth across all the regions,'
The company, which has had a liaison office in Nairobi for five years, upgraded it to a fully fledged unit in July 2012, Oyetunji said. The Kenyan unit covers 15 nations in eastern and southern Africa, Ogaye said.
'By law we are supposed to have some local equity partners on board so we are finalizing with one or two whom we should make public before the end of the year,' he said.
The company signed an agreement with the government of Tunisia in July to begin operations later this year that will cover Arabic-speaking Northern African countries, Oyetunji said.
Egypt will continue to be managed from the Nairobi office, he said.
The company also plans to upgrade its office in Douala, Cameroon, to serve as the hub for Francophone Africa and expects to get a license to establish a southern African base in one of the nations in the region, Oyetunji said.
Shares in Continental have surged 68 percent this year, outperforming a 35 percent increase in the benchmark Nigerian Stock Exchange All Share Index.