This is the beginning of all other roles carried on the operation of our Treasury department. Unlike the accounting staffs who handle the cash receipt and disbursement activities on daily basis, the Treasury Analyst draws all those accounting staffs records and compile it to generate a cash forecast (short and long-range). The forecast and all its components are needed to:

• Determine if more cash is needed. If that is the case, then they can go on to plan for fund inquiry either through the use of CABGOC loan drawdown facility or equity.
• Plan for loan repayment purposes, if the forecast results in surplus and cash excess shows up.

Major usage of company's cash is in the working capital area and CABGOC is not different. Working capital is a key component of cash forecasting. It involves changes in the levels of current assets and current liabilities in response to a company's general level of sales. Treasury is aware of working capital levels and trends, and advises management on the impact to the business.

When the forecast shows some excess funds, the Treasury staffs are responsible for the proper investment of it. What we do in our organization is to repay the loan or invest the money through CBIL any time we identify a cash surplus, always concerned with: (a) maximum return on investment; (b) matching the maturity dates of investments with CABGOC's projected cash needs; and most importantly (c) not putting funds at risk.

Treasury also manages risks particularly in anticipating company's foreign exchange positions that could also be at risk if exchange rates suddenly worsen.

Treasury is responsible to manage a long-term relationship with the banks that can lead to some degree of bank cooperation if a company is having financial difficulties, and may sometimes lead to modest reductions in bank fees. The staff often meets with the representatives of any bank that the company uses to discuss issues concerning both parties meanly payment failures, banks company's financial condition, bank fees structure, foreign exchange transactions, hedges, wire transfers, cash pooling, and so on.

Other than those main roles, fundamentally the Treasury staffs also monitor market conditions constantly, and therefore is an excellent resource for the management team should they want to know about interest rates that the company is likely to pay on new debt offerings, the availability of debt, and probable terms that equity investors will want in exchange for their investment in the company. In essence, Treasury functions revolve around the monitoring of cash, the use of cash, and the ability to raise more cash. All other tasks of the department support these functions.

So, what is insurance and why does CABGOC buy insurance?

Insurance it's basically a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured. Chevron philosophy around the world is to self-insure due the magnitude of the cost associated with insurance premiums and the higher cost saving opportunities. Thus, CABGOC buys only those insurance that are mandatory by local law or by contract.

What insurance packages do CABGOC buy?

Currently CABGOC buys the following insurance:

• Aviation Insurance with ENSA Seguros de Angola, SA
• OIP - Operational Insurance Package (moving from AAA Seguros, SA to ENSA Seguros de Angola, SA since May 2016 by Presidential Dispatch # 39/16) composed by:
  • Block 0
  • Block 14
• MCP - CAR: CRX & Mafumeira Sul (moving from AAA Seguros, SA to ENSA Seguros de Angola, SA since May 2016 by Presidential Dispatch # 39/16)
• Buildings Insurance – GA Angola Seguros, SA
• Motors Vehicles Insurance – GA Angola Seguros, SA
• WC - Workman's Compensation Insurance (moved from AAA Seguros, SA to ENSA Seguros de Angola, SA since May 2016 by Presidential Dispatch # 39/16)

Why do we spend so much money on insurance?

In Angola insurance has been governed by Decrees 6/01 and 39/01. AAA has been monopoly insurance provider for approximately 15 years through an agreement with Sonangol governing the Insurance/Risk Management process. These unique features included:

• A locally (AAA) priced primary layer of insurance
• A 'bonus/mallas' system to adjust premiums if claims occur
• High commissions retained by AAA companies in Angola, UK & Bermuda
• Restrictions in negotiating structure of insurance policies

AAA's process has created high cost insurance environment in Angola when compared with operators' experience elsewhere in the world.

ACEPA has highlighted significant differences between the insurance process in Angola and other territories to Sonangol and ARSEG, in many meetings and workshops. Then the Presidential Dispatch # 39/16 was enacted in March 2016, which effectively ends AAA's monopoly and appoints Ensa Seguros de Angola, SA as preferred insurer on a temporary basis.

Ensa Seguros de Angola, SA has established a reinsurance "line slip" facility with international reinsurers using international reinsurance brokers (Marsh) covering Property Insurance, Control of Well Insurance and Third Party Liability Insurance.

ARSEG are considering a longer term permanent solution and ACEPA has submitted a proposal of the new insurance and reinsurance model to ARSEG for consideration.