Insurance

Retirees inject N371.21bn into insurers’ annuity business

Retirees celebrating at an event organised by the Lagos State government.

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Chuks Udo Okonta

Retirees from the public and private sectors had since the inception of the Contributory Pension Scheme (CPS) paid premium of N371.21 billion to life insurance companies managing annuity accounts.

According to the National Pension Commission (PenCom) a total of 2,941 applications for retirement under life annuity was approved during the second quarter of 2019, bringing the total number of retirees receiving their retirement benefits through the annuity plan to 68,857 from inception.

PenCom noted that the 2,941 retirees received N4.68 billion as lump sum payment and paid premium of N17.53 billion to insurance companies and monthly annuity of N184.50 million, adding that this resulted in total lumps sum payment of N91.28 billion, premium of N371.21 billion and monthly annuity payments of N3.70 billion as at the end of Second quarter, 2019.

For retirees on Programmed Withdrawal (PW), PenCom posited that the total number of retirees currently receiving their pensions under the contracts increased by 3.81 per cent from 214,538 as at the end of the first quarter of 2019 to 222,712 as at the end of the second quarter of 2019.

A sectorial breakdown, it said showed that 65.75 per cent of those that received pension under the PW were from the public sector while retirees from the private sector accounted for the remaining 34.25 per cent.

The pension regulators maintained that during the quarter under review, the sum of N 20.57 billion was paid to 8,174 retirees as lump sum and N 355.09 million as monthly programmed withdrawals.

It noted that from inception to June 2019, the sum of N580.05 billion has been paid as lump sum and the monthly Programmed Withdrawals amounted to N9.50 billion.

Annuity business has in recent times has continued to provided the largest chunk of premium income to life underwriters, as reveled by data obtained from the Nigerian Insurers Association (NIA).

According to the NIA, life insurers generated N77.77 billion from annuity business which was 48 per cent of life business in 2017. Of which the breakdown showed that of the total gross premium of N161.59 billion, Life Insurers earned N44.58 billion, 28 per cent from group life, N39.27 billion, 24 per cent from individual life business and N77.77 billion, 48 per cent from annuity.

A breakdown of net written premium earned by some companies showed that Leadway Assurance Company Limited, posted N56.17 billion; Custodian Life Assurance Limited, N7.71 billion; FBNInsurance Limited, N6.76 billion; AIICO Insurance Plc, N3.22 billion and ARM Life Plc, N2.71 billion.

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