Leadway, AIICO, NEM, CRe, AXA M, FBNIns, CHI, well capitalised for big ticket risks
Insurance industry regulator, the National Insurance Commission (NAICOM) has confirmed that leading insurance companies in Nigeria including Leadway Assurance Company Limited, AIICO Insurance Plc; NEM Insurance Plc; Continental Reinsurance Plc, AXA Mansard Insurance Plc; FBNInsurance and Consolidated Hallmark Insurance Plc have strong solvency margins well above the regulatory benchmark of 100 percent.
Section 24(2) of the Insurance Act 2003 stipulates that the solvency margin of an Insurer shall not be “less than 15 per cent of the gross premium income less reinsurance premiums paid out during the year under review or the minimum paid up capital whichever is greater”.
In other words, the solvency margin assessments are based on admissible assets only, as inadmissible assets are normally excluded in line with section 24 (1-4) and (13) of the insurance Act 2003.
According to the Commission, these companies have strong solvency margins (ratios) and strong capacities that enable them meet claims obligations, as shown in their 2017 financial statements approved by the Commission.
In a statement issued by the NAICOM, confirming the companies’ solvency margin strengths, the Commission said “while not holding brief for any company, NAICOM, being the apex regulatory and supervisory body of the insurance sector in Nigeria does hereby affirm that the companies mentioned above are financially strong and solvent.
In document accessed by BusinessDay, NEM Insurance Plc has gross solvency margin of 302 percent and a solvency margin surplus of 202 percent; AIICO Insurance Plc has gross solvency margin of 195 percent and a solvency margin surplus of 95 percent; Leadway Assurance Company Limited has gross solvency margin of 645 percent and a solvency margin surplus of 545 percent; Continental Reinsurance Plc has gross solvency margin of 168 percent and a solvency margin surplus of 68 percent; Prestige Assurance Plc gross solvency margin of 377 percent and a gross solvency surplus of 277 percent; and Wapic Insurance Plc gross solvency margin of 385 percent and a solvency margin surplus of 285 percent.
Others: Law Union and Rock have gross solvency margin of 184 percent and a solvency margin plus of 84 percent; Lasaco Assurance gross solvency margin 156 percent, while solvency margin surplus is 56 percent; FBNInsurance gross solvency margin 486 percent, and solvency margin surplus 386 percent; AXA Mansard 126 percent, and solvency margin plus 26 percent; Consolidated Hallmark gross solvency margin 156, and solvency margin surplus 56 percent; Custodian & Allied Insurance (general) gross solvency margin 504 percent, and solvency margin surplus 404 percent; while Custodian and Allied Assurance (life) gross solvency margin is 248 percent, while solvency margin surplus is 148 percent.
Insurance companies in Nigeria have proven in recent times that they are liquid and have the required capacity to meet claims obligation when losses crystalise. This is evident in quantum of claims paid in major losses that have hit the industry in the past few years.
Examples are millions of dollar claims paid on Dana air crash, billion naira claims on Nigerian Bottling Company fire incident ; Dangote factory fire claims and Friesland Foods West African Milk Company (WAMCO) flood claims.
As at 2016 financial year, underwriting companies in Nigeria paid claims totaling N110 billion, which is no mean feat when you consider the challenges associated with accessing fund for business, as well as associated high interest rates.
SOURCE: https://www.businessdayonline.com
