Insurance capital base equivalent to a PFA account

Insurance capital base equivalent to a PFA account

Chuks Udo Okonta

The capital base of the insurance industry which stands at about N600 billion is equivalent to an account managed by a Pension Fund Administrator (PFA) Inspen has learnt.  

It was gathered that a PFA manages over N500 billion of the N2.7 trillion pension fund.

Chairman Pension Operators Association of Nigeria (PENOP) Dave Uduanu, who confirmed this, said pension operators are now rated second in the financial sector after bankers. He noted that pension fund administrators are been reposition to play a better role in the larger economy, adding that most PFAs have recapitalised to over N3 billion.

He said: “Pension fund administrators are been reposition to play a better role in the larger economy. By way of rivalry, the only financial institution that is bigger than the PFAs today are the banks. PFAs are now bigger insurance companies, because they manage bigger assets. So, the size of a company is not depended on its shareholders’ funds, but the assets it manages. The biggest PFAs manage about excess of N500 billion, while the biggest insurance firm may be N50 billion. This shows the role of PFAs in an economy.

“The industry’s shareholders’ fund is more that N18 billion, N1 billion is the minimum for a PFA, but some PFAs have N2 billion, while others N3 billion.”

He said the shareholders’ fund of PFAs is not what determines the impact of the pension in the larger economy, adding that it is the size of the pension fund which is about N2.7 trillion. He noted that it is this N2.7 trillion that are invested in the various instruments, such as the money market, bond, capital market, infrastructure and others that would impact the larger society.

Daniel noted that with the enormous opportunities in the economy, the industry has the potential to achieve N2trillion income. He said the operators are under trading with the cash at their deposer stressing that the industry after five years of recapitalisation ought to have been a model to insurers across African and other part of the globe.

Insurance operators have projected that they would hit N1 trillion premium income this year, but observers believed the dream is illusive as there are no visible evidence to support it.

Commissioner for Insurance Fola Daniel, said with the enormous opportunities in the economy, the industry has the potential to achieve N2trillion income. He noted that the operators are under trading with the cash at their deposer stressing that the industry after five years of recapitalisation ought to have been a model to insurers across African and other part of the globe.

 “The issue of how close or far the industry is towards the achievement of the targeted N1 trillion income would not have a straight answer. I think what we need to do is really to go back to the fundamental of the figures behind that target we gave ourselves. On the basis of what we have in the nation, should we really be talking of N1trillion income? Five years after recapitalisation, should we not be talking on something more than N1 trillion? If we deploy N500billion to N600billion to do business, should not be looking at doubling that amount of money? Or even making it triple? I think we have the wherewithal to generate income in excess of N1trillion,” he said.