WIDE range of regulatory reforms initiated by the National Insurance Commission (NAICOM) targeted at strengthening insurance institutions may have impacted positively on performances of underwriting firms in the industry.
For instance, the effective enforcement of the regulations on premium collection and remittances by the commission resulted in dramatic improvement in the cash flow of insurance companies to pay claims promptly; uniformity in International Financial Reporting Standards (IFRS) account reporting across industry players; the drive by the commission towards increasing penetration through the market development and restructuring initiative (MDRI) project; for the purpose of building public confidence in the industry.
The report of the financial performances of some underwriting firms last year is an indication of success of these initiatives.
Specifically, the Chairman, Custodian and Allied Plc, Chief Michael Ade Ojo, speaking at the 20th yearly general meeting of the company in Lagos said “In spite of the tough national economy, regulatory headwinds and myriad of challenges in 2014, our company did not only survive but progressed on all fronts during the year.
“The gross revenue grossed the N25 billion mark for the first time, profit before tax rose by 18.73 per cent to N5.1 billion while earnings per share rose by 11 per cent to 70 kobo.
According to him, it is gratifying that all the subsidiaries were profitable during the year and, on your behalf, I congratulate our management for an impressive result despite the difficult terrain in which we operated in 2014.
Also, Mansard Insurance Plc, the Chairman, Dr. Victor Osibodu, in his report said “gross premium written grew 28 per cent in 2014 to N17.40 billion from N13.59 billion in 2013, while net premium income recorded a 20 per cent growth in 2014 to N9.05 billion from N7.54 billion in 2013. Profit before tax rose two per cent from N1.98 billion in 2013 to N2.02 billion in 2014 as against a 27 per cent dip in PAT from N2.1 billion in 2013 to N1.5 billion in 2014.”
Law Union and Rock Insurance in the abridged financial statements as approved by NAICOM reported a gross premium of N4.16 billion for the year ended December 31, 2014, which shows an increase from N0.44 billion in 2013. The financial statement indicated an increase in the company’s total assets from N6.9 billion in 2013 to N7,29 billion in 2014. The company also recorded an underwriting profit of N1.03 billion for the year.
An international rating agency, A.M. Best in a special report on the industry last week states that Nigeria’s insurance regulator, NAICOM has over the years implemented numerous reforms to improve the perception of the sector and expand the contribution of the industry to the country’s economic output, although to varying degrees of success.
The Commissioner for Insurance, Fola Daniel, in his remarks on the reforms in the industry said “The Commission has introduced a wide range of regulatory guidelines which in addition to other market development initiatives were targeted at strengthening insurance institutions, building confidence in the insurance market and significantly improving the attractiveness of the insurance industry to both local and foreign investors. The growing interest of international investors in our industry as evidenced by the entry of major insurance companies and groups such as Metropolitan Life, Sanlam, NSIA, Old Mutual, and quite recently, AXA is a testimony of the success of our past efforts.
According to him, “Our current regulatory agenda is driven both by our experiences in the past seven years, the Insurance Core Principles issued by the International Association of Insurance Supervisors (IAIS), the outcome of the study on the market we undertook in collaboration with GIZ in 2013, the findings and recommendations in the IMF/World Bank FSAP report on the Nigerian insurance industry.”