Germany acquires 39.25 per cent equity stake in Royal Exchange

Germany acquires 39.25 per cent equity stake in Royal Exchange

Germany acquires 39.25 per cent equity stake in Royal Exchange

An investment fund set up by the German government has acquired 39.25 per cent in Royal Exchange General Insurance Company (REGIC) Limited, a subsidiary of Royal Exchange Plc, an insurance-based investment holding group quoted on the Nigerian Stock Exchange (NSE).

The investment fund- InsuResilience Investment Fund (IIF) was set up on behalf of German government by KfW and managed by Swiss-based Impact Investment Manager BlueOrchard Finance Limited.

In a regulatory filing yesterday at the NSE, Royal Exchange stated that the acquisition has been approved by the National Insurance Commission (Naicom), the primary regulator of REGIC.

In the statement signed by Company Secretary, Royal Exchange Plc, Sheila Ezeuko, the board of Royal Exchange stated that the proceeds of the acquisition would help REGIC to spur growth by increasing its risk capital and supporting its underwriting capacity in agriculture, thus extending its outreach to low income farmers.

With 10 decades of operations in Nigeria, REGIC is reputed as one of the largest non-life insurance companies in Nigeria. Through REGIC, IIF plans to reach out to more than one million Nigerian farmers by 2025.

Based in Luxembourg, IIF was set up by KfW, the German Development Bank, on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). The overall objective of IIF is to contribute to adaptation to climate change by improving access to and the use of insurance in developing countries.

IIF seeks to reduce the vulnerability of low-income households and micro, small and medium enterprises (MSMEs) to extreme weather events.  IIF is structured as a public-private partnership and it combines private debt and equity investments in two investible sub-funds as well as technical assistance and premium support. Deriving from its investment goals, IIF aims at achieving both financial return and social impact.

BlueOrchard was founded in 2001 by the United Nations as the first commercial manager of microfinance debt investments. It has since gradually expanded into many asset classes including credit, private equity and sustainable infrastructure. BlueOrchard currently has invested more than $4 billion across 70 emerging and frontier markets. BlueOrchard aims at fostering inclusive and sustainable growth while providing attractive returns to its investors.

Chairman, Royal Exchange Plc, Mr. Kenny Odogwu said REGIC has entered into strategic alliances with various stakeholders in the agricultural sector in order to drive insurance within the sector.

According to him, the group believes that agriculture and retail insurance are the future of insurance and as such, the group will continue to develop products and services to ensure that it remains relevant within that segment.

“REGIC is determined to take advantage of growth initiatives available in the industry, while leveraging on technology to expand its revenue base and stronger bottom-line,” Odogwu said.

Senior Vice President, Private Equity, BlueOrchard Finance Limited, Ernesto Costa said the history, team and commitment of REGIC to agriculture insurance make it a great addition to the firm’s portfolio.

Costa said REGIC was uniquely positioned to capture the opportunity presented by 30 million under-insured small scale farmers in Nigeria.

“We are thrilled to partner with and support REGIC with capital, technical assistance and our international network in the agriculture insurance space, with the objective to increase the resilience of small scale famers to climate change,” Costa said.

The investment will further strengthen REGIC’s capital base. It should be recalled that Naicom had recently introduced increased new minimum capital base for various insurance functions with a recapitalisation deadline of 13 months. Naicom raised the minimum paid-up share capital of a Life insurance company from N2 billion to N8 billion; Non-Life insurance from N3 billion to N10 billion and Composite insurance from N5 billion to N18 billion. Re-insurance companies were directed to raise their capital base from N10 billion to N20 billion.

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