NAICOM Issues Additional Guidelines to underwrite annuity
By Ewache Ajefu
In it’s determination to protect and consolidate the insurance sector, the National Insurance Commission (NAICOM) has issued additional guidelines for insurers carrying on the business of annuity.
This is contained in a new
Circular No: NAICOM/DIR/CIR/59/2025 dated 29th January 2025, signed by the Director (Innovation and Regulation), A.I. Adamu, to the the Managing Directors/CEOs of all Life Insurance Companies, titled, ‘Additional regulatory requirements for underwriting of annuity business in Nigeria’.
The insurance regulator said these regulations, which are further to paragraphs 3.4.1 – 3.4.3, 7.3.1 – 7.3.3 and 8.1.1 – 8.1.3 of the Prudential Guidelines, are intended to factor best practice in the management of annuity portfolios by insurers.
It stated that, “An insurance company intending to carry on annuity business shall have at least one Qualified Actuary (as defined in appendix 1) who shall take statutory responsibility for the Assets-Liability Matching (ALM) 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 arrangement 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 2 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.”
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 ₦5,000,000,000.00 (Five Billion Naira) or more, the Company shall submit to the Commission the prescribed ALM report monthly, not later than 15th of the succeeding month.
NAICOM said, “An Insurance Company whose strategic business plan for its annuity portfolio will not support the additional expense imposed by this Circular shall not later than 180 days from the effective date of this Circular, transfer its annuity portfolio to another suitable insurance company in line with extant insurance laws and regulations.
“From the effective date of this Circular, an insurance company shall consolidate its Retiree Life Annuity (RLA) funds and assets with its chosen RLA Custodian adopting the procedures prescribed in paragraphs 16.2 – 16.11 of the Regulation on Retiree Life Annuity 2020.”
