Category: Insurance

By Omobola Tolu-Kusimo

Life annuitant’s investment have been given double protection under the Pension Reform Act (PRA) 2014 and the Insurance Act 2003 and National Insurance Commission Act 1997.

The life annuitants, who are retirees, are those who choose to receive their pension benefits through life annuity payment mode.

A Life Annuity is an annuity, or series of payments at fixed intervals, paid while the purchaser (or annuitant) is alive. It is an insurance product sold or issued by life insurance firms.

Basically, the provision of Statutory Reserve Fund in Section 81(1) of PRA 2014 and Section 82(1) for Pension Protection Fund ensures security of pension fund and adequate returns on investment, in this case for life annuity.

Besides, Retiree Life Annuity (RLA) providers have been charged to invest annuitants’ funds in only public limited companies that made taxable profits, paid dividends and issued bonus shares for three years as part of efforts to secure the fund.

The directive was given in the Revised Regulation on Retirement Life Annuity Pursuant to the Pension Reform Act (PRA) 2014 by National Insurance Commission (NAICOM) and National Pension Commission (PenCom).

A pension expert and stakeholder, Ivor Takor said the Contributory Pension Scheme (CPS) rests on two pillars, security of the fund and adequate returns on investment.

He stated that imbedded in PRA 2014 are various provisions aimed at securing pension funds and assets, adding that one of such provisions seeks to guarantee pension funds and assets.

He said: “The section provides that every Pension Fund Administrator (PFA) shall maintain a Statutory Reserve Fund as contingency fund to meet any claim for which the PFA may be liable as may be determined by PenCom.

‘’Section 82(1) also makes provision for Pension Protection Fund. It provides that PenCom shall establish and maintain a fund to be known as the Pension Protection Fund for the benefits of eligible pensioners covered by any pension scheme established, approved or recognised under the Act.

“Subsection 3 provides that PenCom shall utilise the Pension Protection Fund for: (a) the funding of minimum guaranteed pension pursuant to section 84 of the Act; (b) the payment of compensation to eligible pensioners for shortfall or financial losses arising from investment activities; and (c) any other purpose deserving protection with the Pension Protection Fund. In line with the above, Section 14 of the Revised Regulations provides that the security of Retiree Life Annuity (RLA) assets shall be guaranteed in line with the provisions of the Act as it relates to pension assets. In the event of deficits in the guarantee provided, a further guarantee shall be provided in line with the provisions of Insurance Act 2003 and National Insurance Commission Act 1997.

“It further provides that NAICOM may require an RLA Provider to take such actions as appropriate for the purpose of protecting Annuitants against the risk that the RLA Provider may be unable to meet its liability to the Annuitant. In case of actual or threatened insolvency, NAICOM may by order, prohibit an RLA provider from transacting new RLA business for such period as may be set out in the order. Where an RLA provider cannot honour its obligations or is in liquidation, receivership or is in other similar situations, NAICOM shall ensure the transfer all assets representing RLA fund to another RLA provider. Any shortfall in the RLA fund which remains unsatisfied from the assets of a failed RLA provider shall be offset from the guarantee provided.’’

He said there was the need for employees, unions, labour centres, especially Pension Desk Officers  to acquaint themselves with the regulation.

He maintained that the National Pension Commission (PenCom) and NAICOM had done well in addressing the challenges.

In the same vein, the RLA providers were urged to ensure that any bank where RLA funds were invested  would have a minimum corporate rating of ‘A’ and that any debt instrument proposed for listing on  the security exchange through an initial public offer to enjoy RLA funds investment should have a minimum acceptable rating of ‘A’.

The Acting Director-General of PenCom, Mrs Aisha Dahir-Umar and the Commissioner for Insurance, Mr. Sunday Thomas, urged the providers to ensure that investments of  funds on RLA were subject to limits.

The regulators insisted that violation of the regulation would be punished with suspension frombusiness until the infractions were addressed.

According to them, where a violation adversely affects payment of monthly or quarterly annuity to a retiree(s), NAICOM shall impose appropriate regulatory sanctions on the retirement life annuity provider.

Any insurance agent who violates provisions of the regulation would be sanctioned by NAICOM, both parties agreed.

They also said infractions by pension fund administrators and retirement life annuity custodians would be enforced in line wiith the PRA 2014 of PenCom.

By Omobola Tolu-Kusimo

AIICO Insurance PLC, in partnership with We Stand Foundation, has held a Feeding Relief Programme to cater to the needs of 300 underprivileged families in Lagos.

The families within the Iwaya community, Yaba, were beneficiaries of the relief packages, which include  food items and reusable nose masks.

A statement by AIICO’s Corporate Responsibility and Sustainability Manager, Abimbola Shobanjo, stated that the company is delighted to bring smiles to  the beneficiaries.

According to her, besides solving hunger, they also consider their wellbeing a high priority in view of the need to continue to keep safe while they leverage key partners to spot opportunities and drive these initiatives.

The firm’s Managing Director, Mr. Babatunde Fajemirokun, said: “This endeavour is reflective of our corporate culture of touching lives and impacting communities. These are challenging times and we are mindful of the impact. We have a long-term plan in place to ensure the sustainability of these efforts.”

By Omobola Tolu-Kusimo

LACK of adequate scrutiny of public quoted companies is the cause of their low performance and eventual wind up, experts have said.

Financial sector regulators, including the National Insurance Commission (NAICOM), Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE), blamed shareholders for not speaking out against corporate governance lapses by listed firms’ directors.

According to them, when such cases are reported, the regulators would carry out investigations, while sanctions are applied where necessary, to correct the anomaly.

The Chief Executive Officer, NSE, Oscar Onyema, said: “One of the things we pride ourselves in doing at the Exchange is the protection of investors. We know that when something goes wrong, the first person you want to shoot is the Exchange, and possibly, the SEC, because we are in the front line.’’

NAICOM also faulted the shareholders for showing little concern about the  competence of directors of most insurance firms.

According to the commission, the wrong choice of directors had caused setbacks for most firms and the wrong doings by some directors should be placed at the doorsteps of shareholders for not participating in the selection of directors.

But the founder/National Coordinator, Independent Shareholders Association of Nigeria, Sunny Nwosu, disagreed that they were also to be blamed for  the failure of companies.

For him, minority shareholders have been rendered powerless.

He said: “The issue is that the regulator and insurance companies have rendered minority shareholders powerless in this country. This is because the companies defer to the regulator than the minority shareholders. Otherwise, the regulators will take punitive action against the company.

“It is unfortunate that the companies fear the regulators to the point that minority shareholders are nothing before them. So, minority shareholders shout when they think something is wrong but at the end of the day the majority will take the decision. The power of decision is in the voting. The only thing we can do is to continue to shout on the same thing for the understanding of the board.”

Nwosu added that minority shareholders should  have a consortium of shares.

“It is significant for minority shareholders to have 10 per cent. But we should also strive to have 20 per cent because it is better so we can have the power to challenge.

“With 10 per cent, we can call an extra-ordinary general meeting on things that we are convinced is the true position and challenge them,” he noted.

Another shareholder, Mr Adebayo Adeleke said there is a role for minority shareholders.

“There is a universal dictum all over the world that minority will have their say but majority will have their way. The best that the minorities can do is to come to the floor of the annual general meetings and shout because if we are to put anything to vote, we are not likely to win.

“We have been doing some advocacy before now. We have been to the National Assembly, We have got to the courts and we have won a lot of mileage in the time past. otherwise things would have been more terrible than it is now for minority shareholders. But we can still do more. We will continue to engage the regulators and Board of companies for them to listen to us,” he said.

By Omobola Tolu-Kusimo

Lasaco Assurance Plc has recorded Gross Written Premium growth of four per cent from N9.01 billion in the 2018 financial year to N9.34 billion last year.

The Net Underwriting Income increased by 29 per cent from N5.22 billion to N6.711 billion.

Profit Before Tax (PAT) went down by 64 per cent from N958 million in 2018 to N347.7 million last year.

Total Asset increased by nine per cent from N170 billion to N18.5 billion while Shareholder’s fund went down by four per cent from N8.48 billion in 2018 to N8.173 billion in 2019.

The Chairman of the company, Mrs Aderinola Disu, represented by the Independent Director, Sani Ndanusa, spoke  during the presentation of the financial statements and reports for the financial year ended December 31, 2019 to shareholders at the company’s 40th Annual General Meeting  (AGM) in Lagos.

On the future, he said they were restructuring their processes to deliver cost-effective services to their customers.

“The success of any business in dynamic environment depend on its ability to constantly add value to its customers. In order to achieve this we have embarked on digitisation of our operations. We shall continue to ensure quality delivery in all our products and services. As you may be aware, we have also improved on promotion of the LASACO brand by engaging in partnership with media houses for regular presence in the public domain In 2020, we shall continue to move forward by strengthening our corporate governance structure in line with our long term strategy in order to deliver superior services to our numerous customers and also increase the confidence of our shareholders, investors, and all other stakeholders,’’ Disu said.

The company’s Managing Director, Mr Segun Balogun   said, following the approval of shareholders at the Extra Ordinary General Meeting in 2018, the company has engaged professionals to actualise the recapitalisation plans before the deadline given by National Insurance Commission (NAICOM).

He said while the deadline had been extended to September, next year and next December for compliance with phase one of the recapitalisation, their goal is to have completed this phase before the end of next month.

By Omobola Tolu-Kusimo

 

Cornerstone Insurance Plc and its subsidiaries have recorded a Gross Premium Written (GPW) of N13.05 billion in its financial year end 2019, representing an increase of 13 per cent over the previous year, the Chairman, Mr. Segun Adebanji, has said.

Adebanji, who spoke at the firm’s 28th Annual General Meeting (AGM), stated that premiums from life insurance accounts for 32.5 per cent of the gross premium written, an increase of 25 per cent in the previous year.

He said the largest contributors to general business gross premium written were bonds, engineering & accident N2.12 billion; oil & gas N2.04 billion and motor N1.36 billion.

Read Also: ‘Firms must settle genuine claims to improve image’

 

He said the company’s continued growth in special risk lines especially in the power, aviation, and oil and gas sectors was a testament to the confidence its customers and partners have in the firm’s technical underwriting expertise which it continued to strengthen.

He said: “Our investment portfolios yielded positive performance figures driven mainly by trading activities on the Nigerian Stock Exchange (NSE), fixed income securities and the profit from continuing operations of of a joint venture arising mainly from the gains on disposal of investment property, overall, investment activities contributed a total of N4.8 billion to the group’s performance. “The firm’s net claims ratio for the year under review stood at 47 per cent and has been relatively stable since the company put in place stricter risk acceptance parameters, as competitive pressures have driven premium rates to uneconomic levels.

By Omobola Tolu-Kusimo

 

Shareholders of Law Union and Rock Insurance Plc have accepted an offer of N1.23 per share for every 50 kobo ordinary share they held from the new owner of the company, Verod Capital Management.

The Board of Law Union and Rock secured the exit payment from its new investor in the quest to get full value for the investment of shareholders of the company.

Basically, the offer was secured from Verod Capital to purchase the entire issued share capital of the company to which it signed a Transaction Implementation Agreement (the TIA) with Verod, through its investment vehicle, Kanuri LUR Limited, which sets out the broad framework for the acquisition of the entire issued capital of the company by Kanuri LUR.

The agreement for the exit payment was reached by the Board and shareholders at Law Union and Rock Insurance 51st Annual General Meeting (AGM) and Court Ordered Meeting held at MUSON Centre, Lagos, where the deal for the proposed acquisition of the company was discussed.

The development is due to the mandatory regulation by the National Insurance Commission (NAICOM), increasing the minimum paid up share capital of insurance and reinsurance firms with a deadline of June 30.

Based on this, the minimum paid up capital of Law Union and Rock was increased from N3 billion to N10 billion.

However, the proposed deal in the TIA is expected to involve the transfer of a total of 4,296,330,500 ordinary shares of 50 kobo each of Law Union held by the scheme shareholders to Kanuri LUR or any nominee of Kanuri LUR for a cash payment of N1.23 per share to the scheme shareholders, following which the shares in the company would become fully held by Kanuri LUR and its designated nominee.

Subsequently and upon the scheme becoming effective, Law Union will be delisted from the Main Board of the Nigerian Stock Exchange (the NSE or Exchange), the registration of the ordinary shares of the company with the Securities and Exchange Commission (SEC) will be withdrawn and the company will be re-registered as a private company limited by shares.

Chairman, Law Union and Rock Insurance, Mr Remi Babalola, during the Court Ordered Meeting, which followed the AGM stated that the company initially explored merger discussions with other insurance firms and communicated initial recapitalisation plan to NAICOM.

He however noted that they found that the shareholders of Law Union would not maximise shareholder value if such merger discussions crystallised, which led them to seek more optimal avenues for shareholders to get better value for their investments in the company, through acquisition by Verod, using the Kanuri LUR SPV.

The chairman stated: “Following negotiations with Kanuri LUR and further to advice from its advisers, the Board resolved to recommend the Proposal to the Shareholders for their kind consideration a meeting to be convened by an order of the Federal High Court. The Board has further resolved to effect the proposal by way of a Scheme of Arrangement under Section 539 of the Companies and Allied Matters Act Chapter C20, laws of the federation of Nigeria 2004 as your Board believes that same will serve the best interests of both the company and its shareholders.”

The chairman further stated that Kanuri LUR’s proposal stated its intention to acquire Law Union resulting in the company being re-registered as a private company, noting that the proposal would be implemented through Kanuri LUR and its designated nominee, who will receive the shares under the scheme upon its taking effect.

“According to the proposed Scheme Consideration, the offer represents a total value of N1.23 per share, a 129 per cent of the last traded share price of the company on February 27, 2020 at N0.95 per share, being the last business day prior to the date the execution of the TIA and announcement on the exchange, and a 208 per cent of the 60 – Traded Day weighted average share price of N0.59 per share as at February 27, 2020. Finally, with the success of the AGM and Court Ordered Meeting, it is simply a matter of weeks for Law Union to complete its recapitalisation scheme,” he noted.

The shareholder groups commended the Board and Management of Law Union and Rock Insurance on its performance and growth of the company, which made the company attractive to investors. They also stated that the choice taken would also be benefitial to the staff of the company, as there wouldn’t be mass retrenchment.

The Managing Director, Law Union, Mr Ademayowa Adeduro said historically, the company has performed excellently, especially since its acquisition by the consortium of investors (Alternative Capital Partners and Swanlux Solutions and Services Limited in 2012), who embarked on a transformation and restructuring process that has enabled the company align its offerings to the unique needs of the various sectors of the economy.

He pointed out that led to the turning around of the company from a loss-making position of Nl.3 billion in the financial year end 2012 to profitability of N250 million in the following year and this has grown to N860 million in 2019.

“The Shareholders’Fund has also significantly improved over the same period growing from N3.5 billion in 2012 to N7.2 billion in 2019. With respect to the financial performance for 2019, Gross Premium Written rose by 6 per cent from N4.54 billion achieved in 2018 to N4.83 billion. The net benefit and claims declined astronomically by 20 per cent, to Nl.28 billion from Nl.6 billion posted in 2018.’’

“Underwriting Profit increased significantly by 54 per cent, to N0.98 billion from N0.64 billion posted in the preceding year. Based on the decline in Net Benefits and Claims and significant increase in Underwriting Profit, the Company’s Profit Before Tax increased significantly by 91 per cent, to N0.94 billion from N0.5 billion recorded in 2018”, he said.

By Omobola Tolu-Kusimo

 

There is the need for insurance firms to settle legitimate claims promptly to gain public confidence.

Also, the perceptions or misconceptions by the public would be removed.

These were the views of experts as default in claims rise in the industry.

According to a report by the Nigeria Insurers Association (NIA), its Customer Complaints Bureau has resolved 63 conflicts between member companies and policyholders in the past one year, while another 19 cases are about to be fully resolved.

The report said the Bureau has been effective in resolving conflicts between member companies and complaints received from policyholders against member companies, thereby engendering confidence of the public in the industry.

A past president, Nigerian Council of Registered Insurance Brokers (NCRIB), Dr. Ahmed Olaniyi Salawudeen, said it was important that operators are trustworthy.

Salawudeen, who is also the President, Standard Insurance Consultants Limited, said the risk carriers should  ensure that legitimate claims were settled promptly.

He noted that the industry should contribute to the country’s Gross Domestic Product (GDP).

He said: “There is the urgent need for the arms of the industry starting from the regulator, the National Insurance Commission (NAICOM), NIA, NCRIB, claims adjusters, among others, to make sure that insurance claims are not settled as and when due.

‘’Work together to form a common bloc that will be advising the government on what to be done as far as insurance business is concerned. This is very important because we do not need to throw our professionalism to the dogs.

‘’While it is the duty of the regulator to regulate what the underwriter is doing, the operator too needs abide by the ethics of the profession.

‘’The image of industry is nothing to write home about. Insurance claims are not settled as and when due. The first thing we need to do is to make sure that the risk carriers who accept business get paid while legitimate claims must be settled. Without this, the public cannot have confidence in the industry. We have to work together on how to improve the image of the industry, it was not like this in the 60s and we need to go back to put our acts right.

“The insurance industry in other countries are at the forefront contributing positively to the GDP of the government. As far as I am concerned, I am doing my best to follow the ethics of the profession.

The regulator is not the final issue, it is with the industry as a whole. The NIA, NCRIB, need to work together to see how we can improve the insurance image in Nigeria.

“I believe the regulation we have  is okay but we have to individually discipline ourselves. They can make million regulations but if the companies, some of which under charge risks continue in their acts, nothing will work. There was a time they went after brokers. It has nothing to do with brokers. Insurance business is just like a market place. It is the insurance companies that have to make sure they charge the correct premium at the right time.’’