AIICO Insurance pioneering Annuity business in Nigeria
By EDET UDOH
AIICO Insurance Plc, one of the Nigerian top underwriters has continued to pioneer the Annuity business in Nigeria, having commenced the sales of annuity in Nigeria since 2013.
Today, AIICO insurance asset backing annuity liabilities is in excess of N30 billion which is a reflection of the company’s commitment to the business.
AIICO Insurance is one of the first set of insurance companies that have since resumed the writing of Annuity business after the short embargo placed on the business against insurance operators by the National Pension Commission (PenCom).
A life annuity is an annuity, or series of payments at fixed intervals, paid while the purchaser (or annuitant) is alive. A life annuity is an insurance product typically sold or issued by life insurance companies. Life annuities may be sold in exchange for the immediate payment of a lump sum (single-payment annuity) or a series of regular payments (flexible payment annuity), prior to the onset of the annuity.
The payment stream from the issuer to the annuitant has an unknown duration based principally upon the date of death of the annuitant. At this point the contract will terminate and the remainder of the fund accumulated is forfeited unless there are other annuitants or beneficiaries in the contract. Thus a life annuity is a form of longevity insurance, where the uncertainty of an individual’s lifespan is transferred from the individual to the insurer, which reduces its own uncertainty by pooling many clients. Annuities can be purchased to provide an income during retirement, or originate from a structured settlement of a personal injury lawsuit.
The company which had since resumed PenCom regulated Annuity business in collaboration with its appointed First Pension Custodian (PFC) has also obtained the nod of PenCom to recommence the sale of the product nationwide.
Interestingly, today Annuity Funds have continued to grow and has risen to N170 billion from about N145 billion it recorded in June 2016, with over 34,312 annuitants now subscribing to the scheme. This is coming just as the National Pension Commission (PenCom) has given approval to nine of the 26 life insurance companies to take fresh annuity business in the country.
The increase, findings have revealed, is traceable to the fact that more retirees are now considering Annuity option at the expense of Programmed Withdrawal. The volume is expected to rise rapidly, with more approval of life insurers by PenCom to play in the annuity business, just as it has currently given approval to nine life underwriters.
The first set of insurance firms given approval to do annuity business in Nigeria by PenCom are AIICO Plc, Custodian Life Limited, FBN Insurance Limited, Leadway Assurance Limited, Cornerstone Insurance Plc, ARM Life, AXA Mansard Insurance Plc, Standard Alliance Insurance Plc and Niger Insurance Plc.
According to the Head, Retail Business, AIICO Insurance, Mr. Sola Ajayi, who spoke recently to our correspondent in Lagos on the development annuity business in AIICO Insurance said: “We are open for business nationwide and have already started booking new annuity sales from all pension fund administrators (PFAs).”
He said AIICO Insurance is one of the pioneers of annuity in Nigeria, having started Annuity sales since 2013 with over 7,500 annuitants who are being paid their monthly annuities.
“The AIICO annuity product is designed to pay customers for the entire duration of their life no matter how long they live. We are committed to the eradication of old age poverty in Nigeria, one person at a time,” Ajayi stated.
He said AIICO Insurance asset backing annuity liabilities is in excess of N30 billion which is a testament to AIICO’s commitment to ensure that all future commitment will be met as at when due.
On the development, Ajayi thanked the existing annuity customers of the company and assured them that the company would continue to be there for them just as he welcomed all intending customers, assuring them that AIICO Insurance will not disappoint them.
PenCom had on November 3, 2016, issued a circular, directing life insurance companies underwriting Life Annuity business under the Pension Reform Act (PRA) 2014 “to transfer all annuity assets under their custody to licensed Pension Fund Custodians (PFCs) as mandated by the pension law.”
The Circular, stated that the custody of annuity funds, has to reside with PFCs and insurance companies underwriting annuity, should transfer the same to PFCs of their choice within three months ending January 31, 2017.
In addition, approval and release of funds for new annuity requests was put on hold pending when insurance companies would open operational accounts with PFCs to receive any new premium.
Before the Circular was issued, PenCom, had on October 26, 2016 communicated to the National Insurance Commission (NAICOM), of its resolve to bring annuity assets of insurance companies under the custody of PFCs and by extension under its purview.
An Annuity Plan from AIICO Insurance can help protect you against the possibility of outliving your financial resources in retirement. In addition, the policy provides a lump sum benefit in the event of the policyholder’s death.
Benefits of AIICO annuity to annuitants are numerous including guaranteed regular income after retirement; Flexible annuity plans ranging from immediate annuity plans to deferred annuity plans; Surrender values for deferred annuities after one year; A spousal annuity option of 75% of the original annuity after the death of the annuitant.
Other benefits are Tax relief on contributions payable in order to reduce tax liability; an annuitant can choose his or her earning at retirement and fund it at a multiple of 5 times of your earning as death benefit.
There are two types of Annuity – Deferred Annuity and Immediate Annuity,
Deferred Annuity encourages self-discipline by saving for the rainy day. You can determine your earning at retirement and fund it effectively. There is a death benefit of a multiple of 5 times annual earnings when he becomes an annuitant.
Immediate Annuity can be taken if you have a bulk sum and want to receive your earnings immediately. This forestalls the risk of frivolous spending and secures a source of income when one is weak until death.
Immediate annuity includes option for spouse, where your spouse continues to enjoy 75% of annuity benefit after the annuitant’s demise.
Also available is the multiple of 5 annual annuities as death benefit payable to the beneficiary or estate of the annuitant at death.
Annuity cover is designed for anyone planning for retirement; also helpful for retirees wishing to supplement their pensions.
AIICO Insurance is one of the largest Life Insurers in Nigeria and a major underwriter for General Insurance business; key players in Oil and Gas. AIICO Travel Insurance Unit is currently the market leader in the industry.
The company offers a wide range of products and services in General Insurance for Retail and Institutional customers. Today the company is enjoying solid global support which enables it provide sophisticated and high profile options for its clients. The Company’s stability, strength, security and trust over the years have placed them at a better advantaged position in all classes of Life Assurance.
AIICO Asset Management business is supported by a team of experienced professionals, industry analysts and Risk Management specialists who are focused on creating investment strategies that reduce risk and are responsive to client needs.
AIICO Asset Management is a specialist business structured to provide the most appropriate investment solutions and strategies for clients.
Established in 1963, AIICO Insurance Plc (NSE Ticker: “AIICO”) is an insurance, pensions management, and asset management Group in Nigeria with market-leading positions in its key business lines which include: Life assurance and annuity; General insurance and special risks; Pension management; Health insurance and Asset management.
AIICO commenced operations in Nigeria in 1963 as an Agency office of American Life Insurance Company (“ALICO”) – at the time, a subsidiary of American International Group (“AIG”).
The Company was incorporated, registered and licensed in Nigeria as American Life Insurance Company Limited – as a wholly owned subsidiary of ALICO/AIG – in 1970 – to offer Life and Pension products and insurance services. The Company was renamed American International Insurance Company Limited (“AIICO”) upon the acquisition of a 60% stake by the Federal Government of Nigeria, and later listed on the Nigerian Stock Exchange in 1990, after which both shareholders – the Federal Government of Nigeria and AIG divested.
Following the insurance industry’s consolidation in 2007, the Company acquired NFI Insurance plc and Lamda Insurance Company Limited (both cumulatively accounting for less than 30% of AIICO’s pre-acquisition gross premiums).
The Company subsequently recertified as both a General Insurance and Life Assurance Company – taking advantage of its legacy, brand, franchise and strong retail distribution network to grow a leading General Insurance business.
As an insurance company, AIICO’s goal is to be the insurer of choice and the leading insurance company in Nigeria – providing life insurance and retirement services as well as risk underwriting to a substantial and diversified client base, which includes corporations, financial institutions, governments and individuals in Nigeria.
AIICO is the market leader in the life insurance and retirement services and is a market leader (top 3) in Non-Life insurance in Nigeria. The core insurance franchise is complemented by its leading insurance asset management, pension, and health management businesses. Overall, AIICO is currently the 2nd largest insurance company in Nigeria (by gross premiums). The company is working hard deploying cutting-edge technology to drive it operations in order to render quality and second-to-none services to its teeming clients and customers in all its business lines.
Leading other professionals working with the company in providing visionary leadership which has seen the company continuously occupying enviable position on the industry’s hierarchy is no other person than Mr. Edwin Igbiti, a consummate insurance professional with many year of cognate experience.
Mr. Edwin Igbiti, the Managing Director/Chief Executive Officer of AIICO Insurance Plc. Prior to Joining AIICO Insurance; he had served and gained vast experience in Insurance from Phoenix Insurance Company, where he worked for several years. He is a seasoned professional with an inestimable depth and wealth of technical experience that is acknowledged across the industry. He has managed relationships between the company and several international partners and affiliates and is a solution proffering, team-spirited leader with excellent inter-personal skills.
Mr. Igbiti holds an MBA from the University of Ado-Ekiti and an Advanced Diploma in Management from the University of Lagos. He is a Certified Insurance practitioner with the Chartered Insurance Institute of London and a Fellow of the Chartered Insurance Institute of Nigeria. Aside from being professionally affiliated to the Nigerian Institute of Management, Chartered (NIMC), he is also a certified Business Continuity Systems Lead Auditor from the British Institute, UK and an alumnus of the Howard University Business School, U.S.A. He currently seats on the Governing Council of the Chartered Insurance Institute of Nigeria (CIIN).
As a good corporate citizen, AIICO Insurance Plc has consistently improved upon the foundation laid by its founders over 50 years ago. In today’s business environment, it is imperative that a market leader such as AIICO Insurance Plc abide by a set of Corporate Governance Codes and Practices which will further reassure all stakeholders that its business practices have been institutionalized and that the Enterprise has been positioned to deliver value to its Stakeholders.
Having adopted the Codes of Corporate Governance set out by both the National Commission for Insurance (NAICOM) in 2009 and The Securities & Exchange Commission of Nigeria (SEC) in 2011, AIICO has been fastidious in adhering to those codes in addition to also evolving certain business practices which have enhanced our Corporate Governance stature and culture.
