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ANALYTICAL STUDY OF MERGER AND ACQUISITIONS IN THE INSURANCE INDUSTRY IN NIGERIA

ABSTRACT

This project is separated into several sections for convenience of reference and analysis simplicity, as follows:

The introduction to mergers and acquisitions, as well as the study’s background, which outlines the various issues that led to mergers and acquisitions, such as the inability to settle claims, bad apples in the industry, inability to provide better services, and innovative ideas that can help the industry grow. Insurance has not been able to penetrate the rural area, making it a less popular career to study. However, because it has failed in this area, the average person finds it difficult to understand what insurance is all about. In order for the industry’s liquidation to come to a halt.

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Merger refers to the joining of two or more companies to establish a single entity with the objective of achieving a specific goal. While an acquisition occurs when one firm buys another’s assets and inherits its liabilities.

Because the flavor of a good insurance transaction lies in the manner in which claims are handled by the industry, mergers and acquisitions were introduced into the insurance industry due to their: INABILITY TO SETTLE CLAIMS; since the taste of a good insurance transaction lies in the manner in which claims are handled by the industry, but the majority of our insurance industries have failed due to a lack of funds to settle or compensate their insured. And this results in the cost of insurance disputes with policyholders, and this area has had a greater impact on the image of an insurer and the insurance industry as a whole.

The reason for this is because most sectors do not have adequate cash or investments to enable them to settle their clients, so they come up with a way to postpone the settlements. This has tarnished the insurance industry as a whole, with many referring to them as “selfish lots,” “legalized cheats,” “a worthless exercise to insure in Nigeria,” and “their provisions are barely presented to clients while creating contracts,” among other things.

INABILITY TO PRODUCE BETTER SERVICE AND NEW IDEAS: The industry has been unable to encourage certain innovative ideas/operational procedures that will allow it to remain competitive and robust. Because there are still some rural areas that are uninsured, the industry has expanded.

INABILITY TO ELIMINATE Poor EGGS (IE. POOR MANAGEMENT BY BAD AGENTS): The majority of insurance agents are bad eggs who should be removed. Some of the agents are not insurance agents, despite their claims, and because of the money they are generating from the business, they have set up a mushroom insurance firm without a license in order to deceive consumers even more. This behavior tarnishes the industry. Furthermore, the majority of solely employed managers, underwriters, brokers, and other insurance professionals lack basic academic and professional insurance expertise, and as a result, they make insignificant contributions to the industry’s operations.

STATEMENT OF PROBLEM

The research project’s topic is “Analytical analysis of mergers and acquisitions in the Nigerian sector.” The following are some of the study’s problems:

The effect of Nigerians’ proprietary attitude toward sharing even their entire enterprise — the “what I have hold syndrome.”

 

The effect of mergers and acquisitions, which serve as a legal vehicle for company reconstructions, being difficult, tedious, and expensive.

 

The impact of requiring a two-thirds majority in both number and value to approve a scheme of arrangement.

 

The resource’s impact on the usage of unconventional methods to deal with directors who are more interested in stealing other people’s business than in taking care of their own.

OBJECTIVES OF THE STUDY

The main goal of this research is to determine whether or not insurance businesses in Nigeria are considering mergers and acquisitions as a means of improving resource utilization and operational profitability. If such mergers and acquisitions are carried out, the research will also determine and demonstrate whether large gains will flow to the shareholder, employee, and policyholder, respectively. Furthermore, the researcher is interested in learning what impact such mergers and acquisitions will have on the country’s insurance practice in the near future and beyond.

RESEARCH QUESTIONS

Is it true that mergers boost the operating efficiency of Nigerian insurance companies?

Is it beneficial for insurance businesses in Nigeria to combine and acquire?

What happens when a firm merges with another?

Is it feasible for insurance companies in Nigeria to merge or acquire each other?

SIGNIFICANCE OF THE STUDY

The study’s significance is that it will educate both shareholders and policyholders about mergers and acquisitions as a useful and, in some cases, essential tool for effectively dealing with the problem of a failing insurance company, as it limits the impact of insurance futures rather than outright liquidation. The research will also show that sound mergers and acquisitions lead to significant economies of scale and operational optimization. It will help the insurer improve its management and diversification, as well as build its asset base and improve its financial and liquidity position.

SCOPE AND LIMITATION OF THE STUDY

As a result, the study would be limited to Lagos and Enugu, but at least half of all registered companies will be represented in the opinion pool/sampling.

A study of mergers and acquisitions in the Nigerian insurance business is a relatively recent field of inquiry. As a result, information and statistics on the subject may be difficult to get (in addition, due to the vast dispersion of insurance firms across the federation, it is obviously impossible to represent the views of every company due to a lack of funds, mobility, and sufficient things.

DEFINITION OF TERMS

I Insurer: An insurer is a person (party) who promises to pay money to another person (party) known as the insured or assured in exchange for a premium if a certain event occurs.

(ii) Policyholder: Policyholders are also known as insureds, and they are the other party to the insurance contract who has the right to be named on insurance or compensated in monetary terms if the event contingencies insured against occur.

(iii) Insurance: Insurance is a social device that compensates for the financial impact of significance. The payout is made from the total amount contributed by all participants in the scheme (D.S. Hon)

(iv) Acquisition: When one firm buys another’s assets and assumes its obligations.

(v) Merger: A merger is the combining of two or more entities.

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