Money laundering: NAICOM prepares operators for Financial

Chuks Udo Okonta

The National Insurance Commission (NAICOM) today Tuesday, flagged-off sensitisation on money laundering to prepare insurance operators for September visit of the Financial Action Taskforce.

Assistant Director Inspectorate NAICOM, Sam Onyeka, told Inspen that the sensitisation team were are in the companies to help them prepare and ensure that their operations align with the required standard, adding that those who are not compliant, would be assisted in their area of deficiency.

He said: “The exercise is a special arrangement it is not an inspection, it is not designed to punish people by sanction, but to sensitise operators to be prepared for Financial Action Taskforce onsite visitation in September. The Financial Action Taskforce will be visiting Nigeria by September to check the level of compliance on Money Laundering Prohibition (MLP) issues.

“We are in the companies to help them to prepare and ensure that everything is in the way it should be. Those who are not compliant, we would find out areas of their weaknesses and help them to put things in order. So that when the Financial Action Taskforce comes, they would see that they are doing what they should do.”

 He noted that all the companies would be sensitised for the commission do not know who the taskforce would decide to interview when they come.

He said NAICOM would engage the operators for next two weeks starting from today. He stressed that effort would be made to ensure that all the operators are on the same page in terms of compliance.

Executive Director, Business Development, Mutual Benefits Assurance plc, Gbenga Ogunko, commended NAICOM for its determination to uplift the standard of the industry. He said the effort by NAICOM to forestall money laundering in the industry is a step in good direction.

FG set to send insurance bill to National Assembly

 

Chuks Udo Okonta

The Federal Government is putting finishing touches on the insurance industry bill for onward transmission to the National Assembly, Inspen has learnt.

It was gathered from a source in the National Insurance Commission (NAICOM) that the bill is almost on its way to the National Assembly.

Commissioner for Insurance Fola Daniel, said the bill will receive urgent attention when it gets to the National Assembly, adding that the relevant committee of the Assembly which oversights function on insurance, has promised to do what is needful to ensure that there is no unnecessary delay in the passage.

He said the National Assembly is very eager to do anything to support insurance growth and development, stressing that the legislators are very willing and waiting to support the growth of insurance.

 He said: “The proposed bill has been done in a way to support the government’s quest to reduce poverty in the economy. As to time line when the law will be out, we do not have control over when legislation is passed. I can say that very soon the executive should be in a position to send the bill to the National Assembly.

“When it gets to the National Assembly, how long it will take, we do not know. I can say that the insurance environment is lucky. The relevant committee of the National Assembly that has oversight function on insurance is very eager to do anything to support insurance growth and development.

“And if one of the tools to ensure rapid development is the review of the law, they have assured us that as soon as they see the bill, they would do what is needful to ensure that there is no unnecessary delay; and I believe them. That is why I said we are lucky. The executive is eager to ensure that insurance occupies its rightful place. The legislators are very willing and waiting to support the growth of insurance in our environment.”

 

NIA, IMF chart means for insurance growth

Chuks Udo Okonta

The Nigerian Insurers Association (NIA) and the International Monetary Fund (IMF) are exploring means to harness and turn the potentials of the insurance industry into economic growth for the country, Inspen has learnt.

Director-General, NIA Sunday Thomas, who disclosed this in Lagos, said the representatives of the association’s Governing Board led by Professor Joe Irukwu, has met with the representative of the IMF, Dr Rodoyo Wenrhan to discussed how the nation can maximise greatly from the enormous insurance potentials.

He said the parties hope to work out how to sustain stability on insurance contributions to the economy.

He said: “The representatives of our Governing Council led by Professor Joe Irukwu, has met with the representative of the IMF, Dr Rodoyo Wenrhan, to explore the potentials of the Insurance Industry as an economic growth driver in Nigeria.

“Among the objectives of the mission was to ensure stability is sustained within the system. The representative of the IMF stated that the outcome of the meeting is expected to be published with recommendations made on how to move the insurance industry forward”

 Insurance industry is said to have within the last three years, recorded a growth of one million subscribers.

According to the Commissioner for Insurance Fola Daniel, the number of insured in Nigeria was 500,000 as three years ago, but presently stands at about 1.5 million, out a population of over 165 million.

Daniel noted that the Gross Premium Income (GPI) has also increased from N157 million in 2010 to N250 million in 2012, adding that the result increase in the ratio of premium to Gross Domestic Product (GDP) moved from below 0.5 per cent to nearly one per cent.

He said increase in local capacity has moved from less than 10 per cent to 48 per cent, adding that the commencement of implementation of Section 50 of the insurance Act 2003 has improved financial assets of operators. 

 

Insurance future hinges on market expansion – Soladoye

Chuks Udo Okonta

The future and solidity of the insurance industry can only come from market expansion, Managing Director Riskguard-Africa Nigeria Limited, Yemi Soladoye, has said.

He told Inspen that the concentration on premium growth, as against market expansion by insurance operators is inimical to growth. 

He said operators often focus on how to raise their yearly premium, abandoning the need to create expansion through good services and people tailored products.

He said: “All the operators want is to ensure that their premium for this year is higher than what it was last year, and they are ready to spend anything to achieve that. If their market position last year was number six and they move to number five this year, their board would applaud their effort, not minding the cost.

“The companies cost of doing business is indeed very high; the claims ratio is quite low. These are pointers to the fact that insurance companies need something new and better.

“The issue of unhealthy competition will be getting worst, until they look for better, cost effective and non volatile distribution channel. This can be achieved by bankassurance which is having collaboration with banks is a retail channel. It also means engaging in strategic alliances with organisations, like Shoprite, Megaplaza and others.”

He also urged operators to initiate collaboration with cooperative societies and other relevant bodies to deepen insurance penetration.

 

PenCom cautions PFOs on technical agreements

Chuks Udo Okonta

The National Pension Commission (PenCom) has called on Pension Fund Operators (PFOs) to henceforth seek approval before executing any technical agreement with parties.

PenCom in a circular signed by its Head, Surveillance Department, Muhammad Datti, entitled, Execution of Technical Agreement With Third Parties, said the Commission has observed that some Licensed Pension Fund Operators execute technical agreements with third parties without obtaining the prior approval of the Commission.


He noted that this is of concern to the Commission especially as it has been observed that some clauses in these agreements are not in line with global best practice, and in view of this, all Licensed Operators are required to: Seek the approval of the Commission with respect to all technical agreements already executed with third parties; and henceforth seek the prior approval of the Commission before executing any form of technical Agreement with third parties.
　

NAICOM supports sukuk bond

　

Chuks Udo Okonta and Agency report

　

　

The Commissioner for Insurance and helmsman National Insurance Commission (NAICOM) has thrown his support behind Islamic financial bond – sukuk.

Daniel told a foreign Agency that floating such bond would enable the nation buy into alternative financial services, which will in turn attract investors from the Islamic world and Asia.

He said: It is a very commendable step in our drive to buy into alternative financial services, which will in turn attract investors from the Islamic world and Asia."

Osun State Government, it was learnt is planning to raise a sukuk bond worth N10 billion ($62 million) from the capital market to fund infrastructural development, a step which is first in the nation.

"The state is awaiting final approval from the Security and Exchange Commission (SEC)," Semiu Okanlawon, spokesman for Osun State Governor Rauf Aregbesola, told Anadolu Agency.

"By the time we get it, the marketing of the bond should hopefully take off from this month," he added.

In March, the SEC approved new guidelines for the issuance of sukuk bonds; only months after new guidelines were also approved for the operation of takaful (Islamic insurance).

"So far, there has been no objection from the SEC. The expectation is high," said Okanlawon.

A local credit ratings agency, Agusto and Co, has given the note – to be listed on the Nigerian Stock Exchange – an A rating.

Okanlawon said the seven-year bond would be issued through "a book-building process," which would earn returns for sukuk holders through a semi-annually paid rent structure called the Ijara.

The spokesman described the move as part of a N60 billion debt-raising program by Osun State, which started last year.

"The funds will be used to finance construction of education projects, among other development initiatives with which the governor hopes to lay a solid foundation for the future of the state," He added.

Sukuk is an Islamic financial certificate, similar to a bond in western finance, which complies with Islamic religious law.

"Because the traditional western interest-paying bond structure is not permissible, the issuer of a sukuk sells an investor group the certificate, who then rents it back to the issuer for a predetermined rental fee. The issuer also makes a contractual promise to buy back the bonds at a future date at par value," Investopedia an online media said.

It goes on to assert that "sukuk must be able to link the returns and cash flows of the financing to the assets purchased, or the returns generated from an asset purchased. This is because trading in debt is prohibited under Sharia. As such, financing must only be raised for identifiable assets."

According to Okanlawon, the planned seven-year paper would be the first sukuk bond to be issued by Africa's second-largest economy.

He said the decision to launch the bond had the blessing of all the members of the state's executive committee.

"They see the merit of the State of Osun pioneering this alternative and less burdensome financial service," Okanlawon said.

Ọṣun State's planned multibillion naira sukuk represents Nigeria's most innovative and ambitious attempt thus far to promote Islamic finance.

The move comes within the context of ongoing efforts to attract Middle East investors and consolidate Nigeria's latest foray into alternative financial services.



　

　



　

FG considers insurance veritable tool in vision 20:2020

 

Chuks Udo Okonta

The Federal Government has said insurance industry has to play veritable role in the nation’s quest to be among the 20 largest in the world by the year 2020.

President Goodluck Jonathan, who disclosed this in Abuja, said the federal government recognizes the vital role of insurance in the economic development and would continue to support the industry towards achieving set objectives.

He said in line with his administration’s support for the industry, it has embarked on policies designed towards achieving growth and development for the sector.

He said: “This administration is aware that insurance is an essential ingredient of economic growth and development of any country. Without insurance, companies and individuals would not be able to manage risk; the world would be a far less innovative place and many of the activities people and government take for granted could be prohibitively risky. So we value insurance, moreso the Nigeria insurance industry has been making useful contributions to our economic life.

“Indeed, one of the major lessons of the economic turmoil in the recent past is the need for transparent, efficient and neutral government regulation of the financial services sector. We believe that this is the right platform upon which accessible, robust and dynamic markets for financial products are built. This administration clearly understands and recognizes this fact and has actually embarked on policies designed towards achieving growth and development in the insurance industry in the country.

“This is evident under the Group Life Insurance Policy where the federal government has provided the lead by ensuring that its entire employees are fully insured. In the same light, Government has also ensured adequate insurance of its assets and property.

“In line with our transformation agenda, a key driver of the current reforms in the insurance sub-sector of the Nigerian economy is the desire to grow and develop the micro-insurance and Takaful markets. It is the hope of this administration that the drive will engender the desired growth and market penetration.”

He said the on-going reforms in the insurance sector are aimed at creating a world-class regime for insurers and provide significantly enhanced protection for Nigerian policyholders.

 

   

 

A.M. Best affirms ratings of Continental Re, awards B+

Chuks Udo Okonta and Agency report

A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of Continental Reinsurance Plc (Continental Re), saying that its outlook for both ratings remains stable.

The Agency said ratings of Continental Re reflect its strong risk-adjusted capitalisation, good operating performance and established competitive position in the Nigerian insurance market. Offsetting rating factors include Continental Re’s high level of outstanding premiums and exposure to Nigeria’s socio-economic difficulties.

It noted that Continental Re’s strong risk-adjusted capitalisation continues to reflect its low net underwriting leverage, although partially offset by its high investment risk exposure. The credit quality of Continental Re’s reinsurers is strong. At year-end 2012, all reinsurance recoverables were from reinsurers that maintained secure ratings.

Continental Re’s earnings remained at a good level in 2012, despite large single risk losses during the year. Operating results in 2013 are expected to remain positive, reflecting the relatively benign loss environment in Sub-Saharan Africa. However, technical margins are likely to be affected by the company’s high expense base due to the lack of scale in its operations.

Provisions for outstanding premium debtors rose to 45% of gross written premium (GWP) in 2012 (2011: 40%, 2010: 35%). The rising trend in outstanding debtors is a negative rating factor given the problems with premium collection in Africa. New regulations issued in Nigeria in 2013, which prohibit the underwriting of insurance contracts without full payment of premiums in advance, are likely to improve premium collection and liquidity for the industry as a whole. A.M. Best will continue to monitor Continental Re’s performance relating to the collection of receivables.

AM Best said Continental Re maintains a good business profile in Nigeria, being the only private local reinsurer. Premiums sourced from Nigeria account for approximately two-thirds of its business. The company continues to develop its profile across Africa, through the establishment of regional offices. Non-life reinsurance business dominates Continental Re’s portfolio, representing approximately 80% of GWP, the majority of which is written on a proportional basis.

It noted that there are no current upward rating pressures for the firm, adding that egative rating actions could occur if there were deterioration in Continental Re’s financial performance or erosion of its risk-adjusted capitalisation to a level considered unsupportive of its current rating level. Additionally, deterioration in country risk factors associated with Continental Re’s operations in Africa could negatively impact the company’s ratings.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.


　
　




　

Operators jostle for Takaful Insurance licence

Chuks Udo Okonta

Operators seeking the licence to underwrite Takaful Insurance, have continued to turn-in their applications at the National Insurance Commission (NAICOM), Inspen, has learnt.  

It was gathered from a source in the commission, that applications have been received from many operators, adding that the commission would only consider those who meet the stipulated criteria.

Efforts to know the number of applications that have been received failed, as the individual said the process is still ongoing.

He noted that interests have been received from underwriters and the general public, adding that NAICOM would through the licensing demystify insurance practice, making it possible for operators to operate at the grassroots.

NAICOM, in April this year, released the guidelines on Takaful Insurance which it said is in line with the provisions of the 1997 Insurance Act, and aimed at complementing the current drive for financial inclusion to increase penetration.

A circular signed by Deputy Commissioner for Insurance (Technical) NAICOM Ibrahim Hassan, noted that with the guidelines, all intending applicants seeking license from the Commission to transact takaful-insurance business in Nigeria must possess the followings: Certificate of Registration as a full-fledge takaful-insurance company in accordance with International best practice, adding that such a company must have, as part of its name, words or terminologies that connote takaful operations.

Hassan said the interested companies must maintain a minimum deposit in a non-interest financial institution at all times and that the provision for the establishment of an Advisory Council of Experts (ACE) must be made in the articles of the Company and there should be establishment of investment policy for the participants’ Risk Fund.

Takaful means joint guarantee or share responsibility in Arabic, it operates in according to Islamic laws, the products are designed to carter for Muslims and non- Muslims. The products are meant to encourage saving culture and build capital, over a period of time to meet personal or business needs.

Under takaful plan, people can save regularly for a fixed period that is convenient for them. The accumulated targeted amount can be used to fund obligations such as purchase of land, house, marriage or hajj.  It could also be used to meet other long term financial objectives, such as retirement, children education, travelling expenses as well as expected commitment

 

 

Africa Re expands to Brazil, confirms A.M Best rating

Chuks Udo Okonta


Africa Re has been granted a license to operate as an Occasional Reinsurer in Brazil, Inspen has learnt.
A statement from the firm said the important step will allow the firm expand its operations for the first time in Latin America, adding to Africa and Asia. A Framework for Cooperation in Reinsurance Business has been signed between Africa Re and IRB-Brasil Re, the leading reinsurance company in Brazil.

Africa Re will start to write some businesses from the Brazilian market and benefit from exchange of competence through cross-attachment of technical staff, increase of shares in retrocession program and extended underwriting capacity. Later, Africa Re shall register as an Admitted Reinsurer.

In another positive development, A.M. Best and Standard& Poor’s have affirmed the Financial Strength Rating and the Issuer Credit Rating/Anchor of the African Reinsurance Corporation. It retained its impressive A- in both Financial Strength Rating and Issuer Credit Rating/ Anchor

The A.M. Best ratings of Africa Re reflect its strong risk-adjusted capitalization and operating performance, as well as its established market position across the African reinsurance market. Although Africa Re is exposed to the unstable political and economic environment in some regions of Africa, these risks are largely mitigated by its geographic diversity, asset-liability matching strategy and the ease with which the corporation can shift its operations between its regional offices.

The Standard & Poor’s ratings - after Insurance Criteria change- reflect their view of Africa Re's satisfactory business risk profile and strong financial risk profile, built on a strong competitive position in Africa's reinsurance market, as well as its very strong capital and earnings. S&P derives their 'a-' anchor for Africa Re from the combination of these two factors and view potential modifying factors - adequate enterprise risk management (ERM), satisfactory management and governance, and exceptional liquidity - as neutral for the ratings. The S&P ratings on Africa Re reflect the company's stand-alone credit strengths and do not include any uplift for support from the Nigerian sovereign. At the same time, the ratings are not constrained by the sovereign rating due to Africa Re's significant asset and premium diversification.


In an exclusive interview, Corneille Karekezi, the Group Managing Director / Chief Executive Officer of the leading African reinsurer, Africa Re, discussed the latest achievements after the successful Annual General Assembly of the company in Dakar, Senegal.
In the last financial year 2012, Africa Re reported a 35 per cent increase in pre-tax earnings to USD 93 million. Results were supported by a rebound in the equity markets, resulting in higher investment returns (including fair value gains) of 5.7% (2011: 3.7%), and a stable combined ratio of 91%.

Africa Re's operating performance remains strong, underpinned by stable underwriting results and solid investment returns, and continues to meet its strategic objectives comprising return on average equity (ROE): 14% - 17%, return on revenue: 8.7% - 12.2%, net combined ratio: 92% - 97% and net loss ratio: 61% - 66%.

Africa Re's strong risk-adjusted capitalization was further strengthened (in part) by the successful execution of its on-going capital-raising initiative in 2012. This has resulted in an increase in paid-up capital to USD 287 million in 2012 from USD 100 million in 2009. Higher retained earnings ,underpinned by the corporation's strong income generation, also contributed to the rise in shareholders' funds to USD 609 million in 2012 (2011: USD 482 million).

Africa Re is a reinsurance company with headquarters in Lagos (Nigeria). Africa Re has six Regional Offices in Casablanca (Morocco), Nairobi (Kenya), Abidjan (Côte d’Ivoire), Port Louis (Mauritius), Cairo (Egypt), Lagos (Nigeria) for English-speaking West Africa as well as two subsidiaries in Johannesburg (Africa Re South Africa Ltd) and in Cairo (The African Takaful Reinsurance Company). The Corporation is owned by 41 member States of the African Union (AU), the African Development Bank (AfDB), the International Finance Corporation (IFC), the German Investment and Development Corporation (DEG), the Dutch private sector financing company (FMO), PROPARCO (subsidiary of the Agence Française de Development), IRB-Brasil Re and about 100 insurance and reinsurance companies.

REMARKS BY THE PRESIDENT, COMMANDER-IN-CHIEF OF THE ARMED FORCES OF THE FEDERAL REPUBLIC OF NIGERIA, DR. GOODLUCK EBELE JONATHAN ON THE OCCASION OF HIS DECORATION AS GRAND PATRON OF WEST AFRICAN INSURANCE INSTITUTE (WAII)...

REMARKS BY THE PRESIDENT, COMMANDER-IN-CHIEF OF THE ARMED FORCES OF THE FEDERAL REPUBLIC OF NIGERIA, DR. GOODLUCK EBELE JONATHAN ON THE OCCASION OF HIS DECORATION AS GRAND PATRON OF WEST AFRICAN INSURANCE INSTITUTE (WAII), HELD ON WEDNESDAY, JULY 17, 2013

　

PROTOCOL

I feel deeply honoured to be conferred with this award by your institute. I appreciate the leadership of the institute for this gesture and I want to assure you that I really cherish it.

This administration is aware that insurance is an essential ingredient of economic growth and development of any country. Without insurance, companies and individuals would not be able to manage risk; the world would be a far less innovative place and many of the activities people and government take for granted could be prohibitively risky. So we value insurance, moreso the Nigeria insurance industry has been making useful contributions to our economic life.

Indeed, one of the major lessons of the economic turmoil in the recent past is the need for transparent, efficient and neutral government regulation of the financial services sector. We believe that this is the right platform upon which accessible, robust and dynamic markets for financial products are built. This administration clearly understands and recognizes this fact and has actually embarked on policies designed towards achieving growth and development in the insurance industry in the country.

This is evident under the Group Life Insurance Policy where the federal government has provided the lead by ensuring that its entire employees are fully insured. In the same light, Government has also ensured adequate insurance of its assets and property.

In line with our transformation agenda, a key driver of the current reforms in the insurance sub-sector of the Nigerian economy is the desire to grow and develop the micro-insurance and Takaful markets. It is the hope of this administration that the drive will engender the desired growth and market penetration.

Suffice to say that the on-going reforms in our insurance sector are aimed at creating a world-class regime for insurers and provide significantly enhanced protection for Nigerian policyholders.

The privatization and deregulation policy of Government created a level playing field for the private sector to participate and drive growth in all sectors of the economy. The insurance sector was indeed, not an exception in this regard. I am delighted to inform you that this exercise saw to the substantial divestment of the Federal Government from two previously state-owned insurance companies.

Within the purview of Vision 20:2020, government envisions an economy that will rank among the twenty largest in the world by the year 2020 and insurance is a veritable growth driver. It is on this premise that this administration has continued to show adequate support to the National Insurance Commission (NAICOM), the industry regulatory body in its drive to develop the insurance market and deepen penetration.

Let me reiterate that this administration will continue to support the Institute towards achieving the laudable objective set by its founding fathers.

We applaud the contribution of WAII to the development of the much needed manpower for the insurance sector in West Africa and beyond.

Once more, I appreciate members of the Governing Council of the Institute for this honour.

Thank you.

AGM: Shareholders grumble over delay

 

By Zaka Khaliq                                                                                                                           Aggrieved shareholders of insurance companies are unhappy that majority of insurance companies in the country are yet to release their 2012 financial results.

When BusinessWorld contacted shareholders to know their reactions, they were unhappy that only one insurance company out of 58 underwriters has so far made its 2012 financial result public, pleading on the National Insurance Commission (Naicom) to speed up the process of approving the accounts of underwriters, so that shareholders would know the state of their investment.                                    

As it stands, only one insurance company (Mansard Insurance Plc) was able to do its Annual General Meeting (AGM), while others are still battling regulatory issues.

Most insurance companies are finding it difficult to file their 2012 financial results to the National Insurance Commission (Naicom) in International Financial Reporting Standard (IFRS) format. The regulatory body had given insurance firms June deadline to submit their 2012 IFRS accounts, of which only few of them were able to do so.

To this end, only 22 companies were able to submit their 2012 financial accounts to Naicom, although, the regulatory body had approved only five of these accounts.

The other 17 accounts, it was learnt, were queried by the commission. While some of them have responded to these queries, others are yet to do so.

BusinessWorld findings show that a whooping 36 insurance companies are yet to submit their financial accounts to Naicom because they are still struggling to submit in the right format, even though, few had issues balancing their books.

According to regulatory requirement, until Naicom approve any account, no insurance company is allowed to do its annual general meeting, hence, shareholders must exercise patience till the regulator gives their companies go ahead with the AGM.  

Speaking to BusinessWorld, on behalf of shareholders, Mr. Boniface Okezie, president, Progressive Shareholders Association of Nigeria (PSAN) said, the inability of insurers to release their accounts, is affecting the price of the listed insurance equities, with shareholders unwilling to trade on them.

He said: “Most of them could not declare dividend for a long time and now, the result is going to come late. It is not the best for insurance industry because shareholders always react to financial results to decide whether to trade on an equity or not.”                                         He blamed insurers for being too relaxed, especially, when it comes to timely release of financial statements, unlike their counterparts in banking sector and other sectors of the economy.

On the other hand, Okezie said: “The sector is lagging behind and Naicom must gear them up to do the right thing, such that investors that invested their hard earned money in these companies get values for investments.”  

He added that: “Moreover, the regulatory body should help underwriters to come up with their accounts on time. It should speed up the approval, instead of delaying the accounts or sending them back to the affected companies for corrections, especially, when auditors have already worked on these accounts. Once there accounts are not presented to the shareholders, their share prices would continue to dwindle on a daily basis.”

Industry source said some of the insurers may not be able to hold their annual general meeting this year, as they continue to battle regulatory issues.

To this end, it was gathered that the erring companies are currently paying penalty to Naicom, while the listed ones are equally being penalised by the Nigerian Stock Exchange(NSE) for failure to submit their accounts as and when due. 

The 36 erring underwriting firms, BusinessWorld learnt, are now paying N5, 000 to Naicom each day, after the expiration of the June deadline given to them to tender their accounts.                                                   

With this development, capital market analysts said, shareholders should not be expecting much from their respective companies, as most of them would have used a large chunk of their profits to pay penalties to both Naicom and NSE, therefore, unable to declare the expected dividend or bonus.

All these put together, suggests why the shares of the listed insurance companies could not increase beyond N1, as people continue to shun insurance stocks.               

Meanwhile, the approved accounts by Naicom are that of; Mansard Insurance Plc, ADIC Insurance, WAPIC Insurance Plc, Oasis Insurance Plc and Consolidated Hallmark Insurance, thus, can make their financial results public anytime soon.  

Stanbic IBTC Pensions Donates Water to Police College

　

Stanbic IBTC Pension Managers Limited, one of the leading Pension Fund Administrators (PFAs) in the country, has completed a water project it donated to the Nigeria Police Training School at Odukpani in Cross River State.

The Chief Executive Officer of the PFA, Dr. Demola Sogunle, made this known in a statement in Lagos recently. He said the water project, comprising 16,000 liter water storage tanks and pipe network with taps, was unveiled by the Cross River State Commissioner of Police, Mr. Kola Shodipo, recently.

Represented by Assistant Commissioner of Police, Mr. Chris Mbazor, the commissioner expressed his happiness over the project and commended Stanbic IBTC Pension Managers for undertaking the water facility.

He said the water project would cause relief to the school community and students who hitherto had to walk long distances in search of water.

The commissioner also encouraged the PFA and other corporate entities to identify areas of need in the school and assist in order to enable the students and entire school community live and study in a befitting atmosphere. This would enhance the capacity of men and women of the Police force discharge their responsibilities, he stressed.

Also, the Commandant of the school, Assistant Commissioner of Police Godwin Ahulor said, "I must express my deep appreciation to Stanbic IBTC Pension Managers Limited for this rare gesture, which has come as a huge relief to every member of this community."

Meanwhile, Sogunle, who was represented by the Head of Sales, Mr. Bimbo Ladele, said the project was in fulfillment of the group's Corporate Social Responsibility (CSR) initiatives. The initiatives, according to him, aim at impacting positively on the wellbeing of host communities in critical areas such as education, health and economic empowerment.

He recalled that the PFA had in the recent past launched similar projects at the Nigerian Police Colleges in Ikeja and Kaduna as part of a strategic partnership with the law enforcement agency to contribute to the security of the nation.

Trust and transparency central to pension reform

 


With the country in the middle of a population boom, planned reforms to Nigeria’s pension system are timely. The legislative overhaul is expected to boost coverage, inject new capital into productive investments and increase accountability. However, implementation may be tricky, both in terms of ensuring compliance with the scheme and finding trained personnel to staff asset management funds.

Under the proposed legislation, which would update the 2004 Pension Reform Act, combined employer and employee contributions to the compulsory pension scheme would rise from 15% to 20% of the employee’s salary. The number of workers in the system is also likely to grow, as firms with as few as three employees will be required to participate, down from the previous five.

These changes will bring more funds into the system, which can then be directed toward long-term investments in the economy, proponents of the new law say, including Senate President David Mark.

"We think that this money could be usefully invested or channeled to a better use so that the nation can benefit. We cry of lack of infrastructure all the time while there are so many funds sitting down there idle for people to embezzle," he told lawmakers in late May.

This in part highlights the comparatively modest household savings rate in the country, as well as the low levels of buy-in to retirement schemes, but fraud has also been a problem in the past. Employees from a couple of public sector pension funds, including the Police Pension Fund, have been subject to investigations by the Economic and Financial Crimes Commission, which has alleged the illegal diversion of billions of naira. The new law would increase penalties for fraud or misuse of funds, with jail terms of up to 10 years for those found guilty.

Despite these changes, the public may remain sceptical for some time, Adeniyi Falade, managing director of Crusader Sterling Pensions, told OBG. "The mistrust of fund managers still lingers among certain individuals. Stakeholders burned under the old schemes will not be convinced with words. These contributors need to see consistent performance and transparency over a span of time," he said.

While encouraging public trust and increasing savings may take time, the eventual accumulated capital will certainly help provide the country with a large pool of funds for investment. Given the long-term horizons of traditional pension fund investments, infrastructure works offer a particularly salient opportunity.

Most agree that Nigeria’s infrastructure is in need of an additional capital injection, with the electricity network in particular requiring further investment – given that the 160m person country by some estimates generates less electricity than a large European city – although the new legislation prudently limits contributions to such projects at 20% of assets under management, and additional safety net regulations have been set up.

These types of rules can help reduce the risk of future retirees losing their money, but there is still a need for more qualified pension fund managers, according to Senator Mark. Along with strengthened legislation, the industry requires a deeper pool of trained and experienced managers, he told lawmakers. "I think the problem we’ve had is that we have all sorts of rookies," he said. "People who have no idea about managing funds, not to talk of very huge pension funds… I think it’s a very specialised area where you cannot just wake up tomorrow morning and be appointed to manage the pension fund." Educational and training resources for the sector are key for the reforms to succeed.

Equally important is the need to reverse low participation levels. According to Demola Sogunle, CEO of Stanbic IBTC Pension Managers, the number of Nigerians not covered by any form of pension scheme stands at around 54m, out of a work force of about 80m.

This gap is at least in part due to an unwillingness of state governments to comply with the federal system. According to local media reports, "not more than 10 states" out of 36 have enacted their own pension laws, as required by the 2004 legislation, despite the fact that the issuance of state bonds – a lively market in Nigeria – is tied to participation in the pension scheme.

Federal authorities are now taking additional steps to encourage the states to join. The National Pensions Commission, the sector’s regulator, is making a point of visiting state officials to educate them regarding the benefits of the pension scheme for their workers.

The industry is doing its part, having launched public awareness campaigns to attract new contributors, using multiple forms of media, including radio. "Pitching these concepts at the right level is key to addressing those groups in Nigeria with a lower financial literacy, Falade told OBG.

If even a fraction of those not covered by the system were to enrol, this would provide ample opportunities for pension fund managers, both established and new, to build a strong position in the Nigerian market and provide a healthy injection of long-term funds.

Oxford Business Group




 

ARM Pensions Profit After Tax Rises By 78.4 Percent

By Nnamdi Duru

　

The Managing Director of ARM Pension Managers Limited, Mr. Sadiq Mohammed, has said the Pension Fund Administrator (PFA) recorded 33 per cent growth in revenue and 78.4 per cent improvement in profit after tax, for the year ended February 28, 2013.

He confirmed this in an interview with THISDAY at the 2013 Annual General Meeting (AGM) of the company in Lagos recently. According to him, the fund manager raked in N3.02 billion in the last financial year; a 33 per cent improvement on the N2.27 billion recorded in the previous year.

The firm also made profit before and after tax worth N1.43 billion, a 51.2 per cent increase over the N950 million it recorded in the previous year. In the same manner, profit after tax made by the PFA rose to N1.04 billion; a 78.4 per cent increase over the N580 million it made in the previous year.

"We have had a growth of about 33 per cent in terms of revenue as well as profit before tax. We reported a turnover of about N3.02 billion and profitability before and after tax of N1.43 billion and N1.04 billion respectively. It has been a good performance for our company," Mohammed said.

Reflecting on the above, he said it was driven by the combined effect of new inflow of pension funds and strong investment performance.

According to him, within the period under review, funds under management by ARM Pensions funds rose by 45.9 per cent, from N181.3 billion in the previous year to N264.6 billion last year. The firm's earning per share rose from 49 kobo per share to 88 kobo per share while shareholders in the company went home with 60 kobo per share, a 20 per cent improvement on the 50 kobo they got in the previous year. Also, investment returns on ARM Pensions' retirees' fund was 15.51 per cent last year, a slight improvement over the 14.42 per cent recorded in the previous year.

The ARM Pensions boss also confirmed that Retirement Savings Account (RSA) holders in the firm also reaped bountifully in the last financial year, having earned the highest rate of returns on retirement savings in the industry.

"If you look at last year, our RSA fund returned the highest in the industry of over 14.9 per cent. Also retirees, we had the best performance for 2012. If you look at 2012 and the overall for those two retail funds where the bulk of our clients are, we have the best performance in the industry in terms of returns to our clients. Also, over the years, we have returned consistent performance for our clients," the ARM pensions boss stressed.

According to him, the PFA, which was managing retirement savings of about 502,000 workers in the country, has increased the number to about 510,000 as at the end of June 2013.

Mohammed also confirmed that ARM Pensions has paid over N20 billion as retirement benefits to pensions under contributory pensions since the inception of the company.

"We have over 510,000 accounts as at the moment but as at the year end, February 28, 2013, we had slightly over 502,000 accounts. We also have about 6,000 retirees and others because of certain funds that we manage for UBA Plc and we have paid over N20 billion since the business started in terms of retirees' benefits. It is a good business in terms of providing benefits to our clients whether they are contributors or retirees," Mohammed said.

Also foraying into the future, he said his organisation was discussing with other like-minded operators in the industry to see ways of exploring available opportunities by way of business combination. "We have been discussing with different players in the industry. Actually we set the precedent in the industry by doing the first merger or business combination with First Alliance in 2010. That was the first merger in the industry between ARM Pensions and First Alliance PFA. Subsequently, we have been looking at opportunities to see where the potentials are," he said.

"I personally believe that over the next five years, there has to be consolidation in the industry to may be a lower number of players to about 10. It has happened in other jurisdictions and it is only a matter of time, it will happen in the pension industry, particularly given the high competitiveness of the industry in recent years," Mohammed predicted.

Licensed to offer retirement savings fund management services to workers and pensions, with over N285 billion under management as at 30 June 2013, ARM Pension Managers Limited prides said it is committed to giving its clients a most fulfilling and rewarding investment experience in pension administration and management.

It is a subsidiary of Asset and Resources Management Company Limited (ARM), an investment management firm with a track record of protecting and growing investment for private investors and institutions for over a decade.

Underwriters‘ll improve on IFRS over time – NIA DG

 

Chuks Udo Okonta

Director-General Nigerian Insurers Association (NIA), Sunday Thomas, has said the challenges being faced by underwriters on aligning their accounts with the International Financial Reporting Standard (IFRS) would be surmounted gradually in years ahead.

He told Inspen in an interview that the migration to IFRS would not happen overnight, adding that operators are making frantic effort to ensure that their accounts comply with the directive.

He said: “I am aware that all our members are making effort to comply. The issue is not a case of not having an account, but ensuring that the account conforms to the new directive.  

After this year, from next year, operators would begin to improve over time, until they get it totally right. If we say the migration is going to happen overnight, we would be deceiving ourselves.”

He said the association is worried over the challenge faced by operators, adding that they should be giving some time to master the new accounting process.

According to the National Insurance Commission (NAICOM), as at last week only five firms’ 2012 International Financial Reporting Standard (IFRS) compliant accounts have been approved.

NAICOM said 22 firms have so far submitted their results, adding that the approved accounts are those of Masard Insurance Plc, ADIC Insurance  WAPIC Insurance Plc, Oasis Insurance and Consolidated Hallmark Insurance.

 It noted that the responses made by First Bank Life Assurance and AIICO Insurance are under review.

The commission said the account of Law Union and Rock insurance has been queried and that the commission is awaiting the firm's response.

It noted that review is in process on the accounts of UBA Metropolitan Life, Custodian and Allied, NEM, Crusader General, Crusader Life, Zenith General, Zenith Life, FIN Insurance, Standard Alliance Life, Crystal Life, Sterling Assurance, Leadway Assurance, Wapic Life and Industrial and General Insurance

  

Royal Exchange Prudential Life focuses on customer service excellence

 

Chuks Udo Okonta 

The Group Managing Director of Royal Exchange Plc, Chike Mokwunye, has called on staff of Royal Exchange Prudential Life Assurance (REPLA) to focus on customer service excellence, among other major initiatives, to drive the firm’s quest for market leadership and enhance status.

Mokwunye who spoke at a national retreat for management staff of the company, encouraged the staffers, especially those in customer-facing departments, to make service excellence their guiding principle and watchword in their interactions and dealings with clients, to enable the firm remain dominant player in the life insurance industry in the next three years.

He said: “The customer is at the heart and soul of every organization’s growth and success and it is very important to keep them satisfied if one wants to remain in operation. If the customer is treated well, he/she stays with you, but if they receive shabby and unsatisfactory treatment, they (customers) will take their business elsewhere.

“The future of insurance in Nigeria is the life business, which has not been fully tapped into, and for Royal Exchange Prudential to seek market leadership, an effective and efficient policy of customer service, loyalty and retention must be in place in the organisation.”

Managing Director REPLA, Wale Banmore, said in addition to service excellence, his company’s focus is also on the deployment of a robust retail marketing strategy to take insurance to the grassroots, as well as training/upgrading of its marketing personnel, in line with current realities.

“The attainment of these goals, amongst others in the current financial year, will impact positively on the fortunes of the company, (profitability), improve service delivery to our clientele and boost our premium income.

 “Management believes strongly in the Royal Exchange brand and its people, it’s most important resource, are more than capable of delivering outstanding service to existing and potential clients, nationwide,” he said.

Banmore, commended the staff for their drive and resourcefulness, which has resulted in ‘winning ways’ for the company.

He challenged them to work harder in the years ahead, to achieve the firm’s objective of becoming a world class company by 2015.

Facilitators invited to deliver papers at the strategy session include, Managing Director, Wema Insurance Brokers, Gbenga Olawoyin, who spoke on communication strategies; Senior Manager, Continental Reinsurance, Abdulrasheed Akolade, who delivered a paper entitled “Profitability in Life Assurance Business” and Assistant General Manager/ Head, Finance, Royal Exchange Prudential, Francis Okoli, whose paper was titled “Bank Alliance and Co-Marketing – A growth area in insurance.”

Insurers see regulations as greatest risk

 

Chuks Udo Okonta and Agency report

 Insurers across Africa see coping with regulations as their greatest risk, a survey by PwC, has revealed.

The survey stated that series of new laws distracts Chief Executive Officers (CEOs) from focusing on strategic areas of their business, adding that in South Africa some executives of key insurance companies spent about 65 per cent of their time dealing with compliance issues.

In its survey, PwC relayed 12 responses from insurance practitioners in South Africa and seven from the rest of Africa. The professional services company polled more than 600 insurance practitioners and industry observers in 54 countries.

The survey looks at what insurers see as the top risks over the next two to three years.

Victor Muguto, long-term insurance leader for PwC Africa, said the challenge was that a wave of new regulations emerged at the same time. He said companies had indicated that the regulations were costly to adhere to and also time-consuming.

Among the sophisticated regulations that insurers have to deal with are those aimed at treating customers fairly, scheduled for next year. Another is the solvency assessment and management rule requiring long-term and short-term insurers to align their capital requirements with the underlying risk so that they can pay out multiple claims from policyholders.

The solvency assessment is scheduled for 2016. There is also the National Health Insurance initiative which is being piloted, the financial sector code, which came into effect earlier in the year, and a raft of other regulations.

"It’s ironic that the industry’s greatest risks are seen to come from regulation, which is intended to reduce risk, at a time when operating and underwriting conditions are also very hard. It is no surprise that these pressures are reflected in rising concerns about the ability of management to handle them," Mr Muguto said.

Tom Winterboer, the financial services leader of PwC in Southern Africa and Africa, said in South Africa some executives of key insurance companies spent about 65 per cent of their time dealing with compliance issues.

"I think the insurance companies fully subscribe to the fact that there must be regulation," Mr Winterboer said. However, he said insurers have to align their systems with new requirements, and this usually comes at a cost.

Mark Claassen, an actuarial leader for PwC in Southern Africa, said another challenge was duplication in the regulatory environment, which consumed a lot of companies’ time.

Then there was regulatory uncertainty. Firms were investing in systems but were unable to know whether a raft of new regulations would push them to change these systems.

There are also fears that with the pace of change and volume of new rules some of the small insurers may be unable to cope with the costs.

Mr Claassen said hundreds of millions of rand were being spent by companies on aligning systems to regulations.

One of the biggest risks for the South African insurance industry was the subdued macroeconomic environment. There was also the challenge of attracting the right talent. This was cited as the third-biggest concern.

While there was solid management in South Africa, the survey said that the challenges included the shortage of expertise such as actuarial skills.

 

 

 

Sovereign Trust to embark on product awareness campaign

Chuks Udo Okonta

Sovereign Trust Insurance Plc said it is set to embark on a pan-Nigeria press campaign that would highlights the different products it parades.

A statement by its Head of Corporate Communications and Brand Management, Segun Bankole, said the campaign is scheduled to break before the end of the second quarter, adding that the initiative is to further compliment the implementation of the company’s new business model which was adopted earlier in the year.

He noted that the new business model is hinged on harnessing the enormous opportunities that are inherent in the Nigerian economy vis-a-vis the insurance industry.

Bankole said the campaign will amongst other elements, educate the insuring public on the features, benefits and value on all of the different products on offer and the unique customer service experience that await prospective customers in any of the company’s offices nationwide.

He maintained that the campaign is also intended to give more vent to the firm’s brand and expound on the awareness drive for insurance patronage in the country.

 Bankole stressed that the major militating factor against optimal patronage can be pigeon holed to lack of adequate information. He noted that the challenge can be effectively addressed through proper enlightenment.

He further explained that the advertisement materials were made simple with explanatory illustrations and image representation which everyone can easily identify with, adding that the simplicity of the advert concepts is geared towards making would-be customers irrespective of their socio-economic status easily indentify the connecting link with the brand and also to be able to recognize their insurable needs and ultimately get on the company’s train.

Managing Director/Chief Executive Officer of the underwriting firm, Wale Onaolapo, posited that awareness creation is very germane to the advancement and development of the insurance industry in Nigeria and any other corporate entity for that matter.

According to him, awareness creation will constantly inform and remind existing and prospective customers of available products and services being offered by any organisation. He maintained that the campaign would help enhance a larger coverage of prospective customers in localities yet to benefit from the product offerings of the company.

He said the firm remains committed to actualising its vision of becoming a leading brand, providing insurance and financial services of global standards.

 

 

 

NAICOM approves five IFRS accounts

 

Chuks Udo Okonta

The National Insurance Commission (NAICOM) said as at Wednesday July 10, it has approved five underwriters' 2012 International Financial Reporting Standard (IFRS) compliant accounts out of 22 firms that have so far submitted their results.

A statement by the Assistant Director NAICOM, Salami ‘Rasaaq, said the approved accounts are those of Masard Insurance Plc, ADIC Insurance  WAPIC Insurance Plc, Oasis Insurance and Consolidated Hallmark Insurance.

 He noted that the responses made by First Bank Life Assurance and AIICO Insurance are under review.

He said the account of Law Union and Rock insurance has been queried and that the commission is awaiting the firm's response.

  He said review is in process on the accounts of UBA Metropolitan Life, Custodian and Allied, NEM, Crusader General, Crusader Life, Zenith General, Zenith Life, FIN Insurance, Standard Alliance Life, Crystal Life, Sterling Assurance, Leadway Assurance, Wapic Life and Industrial and General Insurance

Industry observers are indeed worry over the slow response by underwriters towards the migration to IFRS. It was expected that the attitude of some operators over the handling of their accounts would change in the new dispensation, but results have shown that some are still comfortable with the daily fine of N5, 000 that is stipulated in the Insurance Act.