Insurance

Insurers embark on reconciliation of asset titles ahead of NAICOM verification

Ahead of planned verification of capital resources of insurance companies by the National Insurance Commission (NAICOM), operators have embarked on reconciliation of asset tittles to enable its inclusion into their books.

The exercise is targeted at measuring the true worth of insurance companies in terms of value of assets and shareholders fund, in preparation for Risk Based Capital, expected to drive the industry operations beginning second quarter 2017.

Mohammed Kari, commissioner for Insurance, says the exercise is also to ensure protection of policyholders and those who have invested in the insurance companies.

The exercise will reflect the true state of each of the insurance companies, and present their real value and state for competitiveness, both locally and internationally, Kari says.
NAICOM in a letter to all the insurance companies, on what it described as regulatory priorities in 2017, noted: “In order to ensure protection of policyholders and beneficiaries of insurance contracts against unexpected losses, the Commission will undertake a verification of the capital resources of all insurance companies in the first quarter of 2017.”

The Commission also noted that this would entail a verification of the assets and liabilities of all insurance companies.

“In preparation for this, boards are advised to ensure fairness in valuation of assets and liabilities of their companies when presenting the financial statements for the year ending December 31, 2016. While, all professionals that participate in the financial reporting supply chain are expected to ensure their duties in valuation of assets and liabilities and issuance of opinion on financial reports are discharged creditably in accordance with relevant laws and professional standards,” it noted further.

Ben Ujoatuonu, managing director/CEO, Universal Insurance plc, who confirmed preparations of the companies ahead the verification exercise, said: “We are ready for the exercise.
“What we have done is to make sure that we got transferred all the asset titles so that both physically and in our books, they can be verified.”

According to Ujoatunu, his company is in solid condition with shareholders fund of N7 billion and solvency margin of nearly N5 billion, far above the statutory requirement.

Analysts at Augusto & Co. predict that implementation of the risk-based capital in the insurance industry will likely spark up mergers and acquisitions, whereas industry players from indications are keen on sustaining their brand identities, even in their original names. But this however will be known over time.

The nation’s insurance industry as of 2015 financial year posted a total asset of N941.3 billion, as against N838.6 billion in 2014, showing a 10.9 percent increase.

While the non-life companies contributed N464.25 billion in the period under review, life companies contributed N430.72 billion. Total liabilities of the non-life assets stood at N464.3 billion, while that of life business stood at N430.7 billion.

BusinessDay

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