The National Insurance Commission has issued fresh regulations on annuity businesses, effective February 1, in a bid to sanitise that segment of the market.
According to a statement on Friday, NAICOM said it released a circular outlining additional regulatory requirements for life insurance companies carrying on annuity business in Nigeria.
The circular, dated January 29 2025, signed by Director (Innovation & Regulation), A.I Adamu, issued to Managing Directors/CEOs of all Life Insurance companies, aims to enshrine best practices in the management of annuity portfolios by insurance institutions.
The new rules mandate that insurance companies are required to have at least one qualified actuary responsible for asset-liability matching analysis and implementation of its adoption by the investment team of the company.
“An insurer that does not have an in-house qualified actuary, shall make arrangements for a Qualified Actuary from an external actuarial firm to take on the ALM responsibility on its behalf for an interim period of no more than 2 years, subject to the Commission’s approval for an extension for two or more years, thereafter.
“The appointment of an in-house or external Qualified Actuary, who shall sign off all ALM reports as required by the provisions of paragraphs 3.4.3, 7.3.1 and 8.1.5(m) of the Prudential Guidelines, shall be subject to the prior approval of the Commission. ALM Reports: Companies are required to submit ALM reports to the Commission quarterly, with requirements outlined in the circular such as required actions by insurers depending on the results from specific analysis applying guidance provided in the NAS Standards of Actuarial Practice,” part of the guidelines read.
NAICOM said that insurance companies are required to comply with the new requirements, with the Board of Directors responsible for ensuring strict compliance.
Also, the regulator said that companies that are unable to cover the additional expenses imposed by the circular are required to transfer their annuity portfolio to another suitable
insurance company within 180 days.
On the mandated ALM reports, the new guidelines said, “The ALM report shall be submitted to the Commission not later than 15 days after the end of every quarter in line with the reporting requirement stipulated in paragraph 3.4.3 of the Prudential Guidelines.
“Without prejudice to paragraph 7 of this circular, where the annuity portfolio of an insurance company has more than 1,000 (one thousand) annuitants or the portfolio is valued at N5bn or more, the Company shall submit to the Commission the prescribed ALM report monthly, not later than 15th of the succeeding month.”
