The mishandling of annuity business outside the umbrella of annuity for pensioners that is regulated by the National Pension Commission (PenCom) has prompted The National Insurance Commission (the Commission) to release a circular outlining additional regulatory requirements for life insurance companies carrying on annuity business in Nigeria.
The circular, dated January 24, 2025, aims to enshrine best practice in the management of annuity portfolios by insurance institutions in furtherance to ensuring a safe, sound, and stable insurance sector.
The circular which takes begins to roll in life insurance companies would require such underwriters to have at least one qualified actuary responsible for Assets-Liability Matching (ALM) analysis and implementation.
Following after this, these class 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 (NSAP).
The responsibility for regulatory compliance now rests with the Board of Directors that is to ensure strict compliance. In a situation where a company is unable to cover the additional expenses imposed by the circular, the mandate on the Board is to transfer their annuity portfolio to another suitable insurance company within 180 days.
From the effective date February 1, 2025 insurance companies are expected to comply with the new requirements to ensure a stable and secure annuity business in Nigeria.
