Magande launches Indigenous reinsurance firm
By CYNTHIA MWALEFINANCE and National Planning Minister, Ng’andu Magande, has launched the first-ever indigenous reinsurance company, with a call to the industry to retain local risks and reduce outflow of foreign exchange. Prima Reinsurance Plc, formed with a share capital of K2 billion, is expected to be quoted on the Lusaka Stock Exchange by the end of this year.
Officiating at the launch of Prima Re on Wednesday night, Mr Magande commended the company for coming up with the initiative saying it would add capacity to the market and retain some of the risks that insurance companies could not retain.
Mr Magande added that the retained premiums would be invested in other sectors of the economy.
“Prima Re is not only the first Zambian reinsurance company but it is a private sector initiative with no government funding. This is the kind of initiative expected of an innovative and vibrant private sector,” he said.
He challenged Zambians to pool resources together and develop an internationally respected reinsurance company.
“Zambians should not continue to wait for foreign investors to develop their country, even when they have the financial capability to grow their own industries,” he said.
Mr Magande said Government was looking forward to a time when all local risks would be retained citing risks in mining, energy and telecommunication sectors.
He, however, noted that the reasons for underwriting such type of risks particularly, in mining were due to lack of capacity and expertise in the market.
The minister urged the insurance industry to step up training of its underwriters in various fields adding that use of the insurance business college be maximised through training of staff in the industry.
On the Pension Insurance Authority (PIA), Mr Magande called on the PIA to seal all the loopholes for companies in a habit of directly insuring or reinsuring risks outside the country.
Under the Insurance Act of 1997, it is illegal to insure or reinsure risks outside the country directly by companies.
He also said Government had directed the PIA to revise the minimum capital to address problems of low capitalisation of the insurance companies to allow increased risk coverage.
Earlier, Prima Re managing director, Exhilda Lumbwe said the establishment of the company arose from the need to protect local insurance companies against large losses and provide additional capacity to the market.
Ms Lumbwe also said the other reason was of the absence of a local reinsurance company.
She said statistics have shown that the country was losing over 30 per cent of premiums annually in form of reinsurance.
“For instance, in 2004, the insurance premium for general business in the market was K257 billion of which K106 billion went out as reinsurance premium”, he said.
Ms Lumbwe said Prima Re intends to raise its capital to an internationally acceptable level through the sale of shares on the LuSE.
“The process of ultimately listing on the Stock Exchange is underway and we should be quoted on the exchange market by the end of this year.
We are already discussing with interested corporate organisations to buy shares in the company under our private placement initiative,” she said.
posted by MrK @ 6:07 AM
2 Comments:
" “Zambians should not continue to wait for foreign investors to develop their country, even when they have the financial capability to grow their own industries,” he said. "
Hmmm, intersting. Zambians should not wait for foreign investors to develop their country?
Replace 'Zambians' with 'the MMD', and he has a point.
Is it just me, or are Zambian politicians trying to distance themselves from the concept of FDI?
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