We're prepared to reinsure emergency power ships – GN Re CEO
GN Re is one year old but is marking that milestone on the quiet. Maxwell Akalaare Adombila (GB) caught up with the Chief Executive Officer, Mr Joseph Kusi-Tieku (JKT), for a discussion on the company, its success and challenges, the industry and the way forward. Below are excerpts of the discussion.
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GB: GN Re is one year old. How has your experience been, operating as the third reinsurer?
JKT: As you know, we were licensed to operate on September 9 and we launched the company on October 13, 2014.
Immediately after that, we hit the ground and started telling people what we could do. Our message was simple: We are here to provide traditional reinsurance support for the industry and this we will do with a high focus on the client – the underwriting public.
So, all year, we have been focusing on the client and in the process we have honoured all claims that have come up, particularly those coming from the June 3 floods.
GB: How has the underwriting public responded to your entry into the reinsurance market?
JKT: The market's response to our evolution has been same as it is with normal human behaviour; there is always caution to use a new brand at the beginning. Because of that it has slowly come around.
Some companies have their board having a say in who they should place reinsurance with. So, if you are a new company and you want them to entrust security of their risks to you with only a promise that you will pay when there is a claim, then you should expect that it won't come around easily.
The interesting thing, however, is that elsewhere, we have been received with open hands because we are giving underwriters options.
We have been around our clients, making telephone calls and personal visits, and trying to find ways and opportunities to add value to their business. The cedants that do business with us can attest to this.
GB: What sets you apart from the competition?
JKT: We have a very good capital base but this alone does not give insurers all the comfort they expect from a reinsurer. In this our business, you must ensure that you are putting together a staff and management structure that can operate in tandem with the business objective or marketing message.
In the main, we have exhibited high professionalism and closeness to the client. There are several aspects of our business and composition that makes us stand tall in the midst of the competition and these include:
Pay claims promptly. We have paid about 50 per cent of our claims within 48 hours upon receipt of all claims papers and documentation.
Respond to offers for support from the market within 24 hours;
All general queries are responded to within the working day
Read all emails and in general provide responses within six hours latest.
Return missed calls from clients
Use courier for prompt delivery of correspondence.
Also, reinsurance is highly technical and that is why we put in place a very solid board of directors that is well composed in the areas of law, investment banking, public administration and management, accounting, finance and insurance.
GB: What has been your major achievements within the one-year period?
JKT: Our achievements have been many. Key among them is our ability to pay a total of GH¢1.5 million in claims to clients affected by the floods that hit Accra in June, this year.
GN Re has been very prompt and very resolute in its commitment to honour our share of the claims. To date, we have paid GH¢1.5 million to cover various facultative and treaties claims received from our clients.
Indeed, we are committed to honouring all losses. Some of them are being worked out by loss adjusters and immediately they are done, we will pay for our shares. What this means is that we are very solid and capable of honouring all claims to the public.
Our second biggest achievement has been the manifestation that we are bringing technical competence to the market. We did this by supporting the market with a two-day training seminar on power plant insurance.
If you put that in context of the current power challenges, you realise that all efforts by government has been to shore-up our energy generation. This has been in the form of bringing in power generation equipment and barges from foreign countries. So, as underwriters, we should be prepared to provide quality insurance on these plants.
We saw that as very opportune; hence, the need to equip the industry with the technical know-how. We are happy to note that we did this with the support of our international partners with high expertise in power plant insurance and underwriting.
Our third achievement is the revolution that we have started in the industry by offering an alternative to the reinsuring public.
For example, in our first two months of operation in 2014, we managed to close the year with GH¢1.2 million in premium.
In 2015, we have so far achieved about 95 per of our budgeted income.
GB: Talking about power plant insurance, do you think the industry is solid enough to underwrite insurance for the two power barges due to arrive in the country from Turkey later in the year? And will GN Re be ready to reinsure an insurance company in such a deal?
JKT: First of all, we are a fully fledged reinsurance company and we are capable of providing lead underwriting terms for these barges and power plants.
So, the answer is, yes, we can provide the underwriting because these plants are being built for the government.
If my information on them is correct, they are to help provide additional energy for a period and we could acquire them if we so desire.
So for the period during which they are here, we may have the obligation to provide insurance to cover them based on the lease agreement. Therefore, GN Re is ready to provide reinsurance cover for the emergency powerships.
GB: To a large extent, it is normal for companies to break even or even post losses in their first years of operations. Is this the case with GN Re or is it different?
JKT: As a reinsurance company, I will look at profitability in two ways—you have the underwriting profitability and the overall profitability. The underwriting profitability is where you match your income directly with the claims and management costs. The overall profitability is when you add your investment income.
In the case of GN Re, we may not achieve underwriting profit because of the relatively small gross income and big flood claims that hit us.
We understand this since we are in business first of all to pay claims before we declare profits.
Also, let me state that the underwriting profit is informed by the amount of premiums written.
In this regard, we note with concern the undercutting of gross rates and the under pricing of risks in our market.
This is caused by unhealthy competition between brokers and also between underwriters. Going forward, I think stakeholders and the NIC should look at the problem and address it.
Another cause of underwriting loss is the high acquisition cost. Whereas premium rates are falling, acquisition costs are high. All these are putting pressure on underwriting profits in the market.
GB: One year is gone. What next for GN Re?
JKT: Our focus will be to become the number one reinsurance company when it comes to customer service. We want GN Re to be a replica of what a customer wants in a reinsurance company.
For us, being customer-focused is not just being able to pay claims but being around the customer and building technical capacity, developing and pricing products and putting in place good risk-management mechanisms for that product.
We now know what the floods can do and every Ghanaian knows where in Accra the floods hit the most. The question is, what about earthquakes? Have we, as risk managers, identified and measured how much damage can be suffered and can we manage the losses?
As a company, we will look at this area and build capacity to contain an earthquake loss should it happen. I know Ghanaians don't like to talk about things that bring destruction but as a risk manager, I can't run away from it. These are high risks that we must plan for and build technical capacity to manage when they happen.
GB: What is your personal vision for GN Re in the short to medium term?
JKT: I want to see this company flourish and as my chairman, Dr Paa Kwesi Nduom, intimated: “I want to grow a world-class reinsurance company."
I want to ensure that beyond the shores of Ghana, this company is listed when there is a count of top reinsurance companies in the world.
On growth, I want to see GN Re grow in leaps and bounds and become a massive reinsurer that carries risks in Ghana and Africa.
GB: Any message to clients and stakeholders?
JKT: My message to clients is that GN Re offers alternatives and options for insurers and we are here to stay. Everything points to the fact that we are solid and insurers shouldn't have any fears to do business with us. They should come, talk to us and we will make a plan together. –GB