In conversation with
Ms Patty Karuaihe-Martin
Managing Director | Namibia National Reinsurance Corporation Ltd
Under your leadership how can we tell the story of the infrastructure that exists in Namibia, and what is your role as a leader to develop the brand reputation?
Patty Karuaihe-Martin: In Namibia we are small in terms of numbers, we are only 2.4 million, but in terms of infrastructure we are one of the most developed African countries, especially for a developing country. The infrastructure, like roads, education facilities, ports are now well-established. The testimony of this comes from people visiting Namibia, they say we are a first world country – some of the infrastructure is on par with first world countries. The country is peaceful and stable; there is security and political stability, the financial sector and the insurance market is also stable and mature – which should make the country attractive to investors. We have the second biggest financial market capitalisation after South Africa. Investment has happened, but we still require more infrastructural development where investors can play a vital role.
Three to four years ago an infrastructural plan was developed, the government said we needed over 2 billion Namibian Dollars. They identified all the infrastructural projects key to the country’s development, many of these projects have to do with the roads, ports, and connecting Namibia to the rest of Africa, like the Trans Kalahari Corridor/Highway. NamibRe is there to support those projects through insurance and reinsurance.
In terms of the insurance, NamibRe was established to curb the outflow of capital out of Namibia. Our purpose is to keep the money in the country for local development. We can do better and intend to continue to increase our retention capacity, which has varied between 79 percent (2017) and 83 percent (2016). We do retain a considerable amount within the country in order to make sure the money remains in Namibia to support the Country’s development agenda. The research we did revealed that 1.3 billion was leaving the country in terms of reinsurance.
Are you still looking for greater partnerships across the continent?
Patty Karuaihe-Martin: Yes. We are in a very fortunate position as many people want to come to Namibia and do business with NamibRe, which means we are lucky and we can choose. To build relationships in the reinsurance industry it is always a reciprocal arrangement. Every year we look at who is our lead partner and what value they bring to us, we change it up, add or take away. Since its establishment, NamibRe has partnered with well-established Reinsurance companies such as MunichRe, AfricaRe and Continental Re, which are AAA rated.
How confident are you that NamibRe will be different to a lot of the other parastatals that have come before it?
Patty Karuaihe-Martin: Our history shows that we are different. Our Board is a team of seven, all were appointed by the Minister of Finance. Our board is well qualified and has a diverse set of expertise: we have two chartered accountants, an advocate, a lawyer, a banker, and the one is a representative from the Ministry of Finance. We have brought all this expertise together, and we are now looking for an industry (Reinsurance) expert for the Board.
For the last seventeen years NamibRe has been run professionally. The Minister appoints the board, but he also consults and he ensures that he appoints the right people. I cannot speak for all parastatals but they have started to introduce measures, making sure they get the right technical expertise on the board. We would like to gain private/outside interests, about 40 percent. We want to recapitalise the institution and ensure that all the reinsurance money comes through NamibRe. Once we have built up our capital base to a particular level, then we will invite private investment. We have already been approached by private investors so our investment case is there. Over the last two financial years I have overseen NamibRe, we have doubled our gross premiums, we have doubled our net premiums and profits. The institution has grown and proven that it can stand the test of time.
How do you go about attracting the right investor?
Patty Karuaihe-Martin: At this stage we have not started the process. We have a great network within the African context, insurer and reinsurer, organisations like the OSI (Open Society Initiative for Southern Africa) the AIO (African Insurance Organisation), which are professional institutions. I sit on the OSI board and they have nominated me for the AIO one where you have all the CEOs of African insurance and reinsurance companies.
The week after next we will be in Mauritius for the annual Reinsurance Forum. We have a conference session and a separate session where we meet amongst each other. Because of the network we have, you build up good inter-personal relationships, you get to know who is who in the industry, who is credible and who is not. Through this fora we also get investor requests. Often brokers will connect you with other contacts they have. The current enquiries we have got have been through those kinds of sources. We have the GIPF (The Government Institutions Pension Fund), who have a lot of funding they send into the insurance market for infrastructural development. I often get asked if I have any projects as there is quite a lot of interest in investing in them.
There are a few local insurers that want to buy into NamibRe, I said we can talk after two years. There is that appetite. They see NamibRe as a successful company that has growth potential.
I started with a vision to expand and focus locally once we have exhausted our current avenues then we can move beyond and into Africa. We have a certain percentage for African investment we target. When I started we were at 10 percent, but it can fluctuate year-on-year.
How do you feel you can continue to maximise your shareholder profits? What is next? How are you going to approach your vision or mandate, which is to go into the African continent and be a lead player?
Patty Karuaihe-Martin: We have had a five year strategy as to how to increase our premiums. When we came in we were a relatively new team. Which allowed us to take the institution apart and see what was working and what was not. When we did the analysis, we could see that the Act that we had, Namibia National Reinsurance Corporation Act 22 of 1998, was not applied the way it should have been.
In 2001 there was a compromise agreement and industry has been working on that for a while. The original agreement could be manipulated easily. We consulted with industry and assessed the agreement, the percentage was never increased, and originally it was set low. We negotiated so it could be increased, which allowed for the increase in our gross premiums. Going forward we want to implement the Act as it was written and approved by our cabinet. The Act requires that we should get a percentage on each policy, which is quite a contentious issue in the industry.
What is the road map for a deepening and diversifying the financial services sector within Namibia?
Patty Karuaihe-Martin: It is a mammoth task, it will not be easy. The industry will tell you that there is too much regulation and legislation. I think NAMFISA (Namibia Financial Institutions Supervisory Authority) need to come on board more, especially in the way we do business and supporting us. Industry has had seven years to make changes and they have not done it. The only way for changes to be made is if the government enforces it.
Transformation is an important issue that needs to be addressed in the financial sector. I want us, as a reinsurer, to be doing more within the financial sector, in terms of transformation, training, skills development, and developing our country.
We work closely with the rest of Africa, from Tanzania, Kenya to Uganda. I have been approached by GhanaRe and ZepRe, we are planning to get together and see what products we can look at to enhance the African market. But as you can see there is definitely an African comradeship, where we want to work together.
How do you penetrate the insurance market currently sitting a lowly 3.5 percent throughout the continent so that there can be greater cohesiveness in Africa?
Patty Karuaihe-Martin: We can do it through the current networks we have, which is a good departure point. At the OSI East African countries take part and support each other whereas the Southern African countries do not do that as much. The AIO’s (African Insurance Organisation) conferences have about 1,500 people attend, as do ISA, which is the South African counterpart.
The Group Managing Director from Continental Re is a Pan-Africanist, he believes that Africa should work together more. This year they came to Namibia for their annual CEO Summit next year in April. When interactions like this take place, the business part of that happens more easily. It creates far reaching opportunities. We are frightfully awake to the potential of the African continent and our duties.
Why do you think there is such a stagnation when it comes to bringing African communities together? And how do we change this mindset?
Patty Karuaihe-Martin: I believe South Africa and Namibia are the culprits. They are comfortable in the way they do business, but they should be the driving force in bringing Africa together to do business. In terms of penetration Namibia and South Africa have the highest insurance penetration rates in Africa.
When we hosted the OESAI conference in 2016, someone from our Institute said we would not get money for it. But when I called all the insurance companies, they participated and contributed towards the event. I said to them you do not have to go to Africa because now Africa is coming to you, about 40 countries at once to build relationships with. I believe that if we could collectively swing that mindset out of the status quo we could fast track integration and development of SADC and the African continent.
NamibRe, as a reinsurer, want to create a forum; we want to work together and create opportunities for the greater social net benefit.
Sometimes we see it as valuable to go on an international tour, one year we went to New York and Dubai, this year we went to Singapore and Hong Kong. We visited the Deloitte and AIG offices, the CEOs came to speak with us and asked us about the African insurance landscape, it was very informative. These tours are the perfect opportunities for Africa to be represented, not just Namibia and South Africa.
What role do you feel Namibia should play on the continent and do you think it should take more of a lead role in shaking things up?
Patty Karuaihe-Martin: I used to be a partner at PWC, there they also had an African drive. They have a shared-service-based approach, that is the future I see. I believe Africa needs to unite so we can go to the rest of the world. There is definitely a willingness at NamibRe to share with the rest of Africa, to train people. Once NamibRe has found and solidified its foundation locally, we will expand to the rest of Africa. That is the plan for the near future.
I believe that Namibians have been too complacent, which is partly due to becoming inward looking due to Apartheid. We cannot sit here and complain about the Chinese coming over and investing in Africa. Often they come with little or no English, just a dream and make it work. We as Namibians and the next pioneering leadership need to be on the front lines of investment into SADC and Africa. We have a greater appreciation for the cultures and the people and so have an added advantage to develop relationships across the continent and win tenders. The time of Namibian complacency needs not be our future. We have a significant role to play.