CHAIRMAN ADDRESS BY PRINCE AUSTIN ENAJEMO-ISIRE, FCA, FIoD, SCIIN, MCIB, MBA, BOARD CHAIRMAN, NIGERIA SOCIAL INSURANCE TRUST FUND (NSITF), ON THE OCCASION OF NATIONAL ASSOCIATION OF INSURANCE & PENSION CORRESPONDENTS (NAIPCO) 2020 ANNUAL CONFERENCE ON THE 4TH DAY OF NOVEMBER, 2020, AT 4POINT BY SHERATON, ONIRU, LAGOS.
It is my pleasure to welcome everyone to this conference taking place in this beautiful city of center of Excellence. First, I wish to sincerely thank the Chairman and members of Council of NAIPCO for inviting me to chair this year Conference, the 5th Edition in the series with the Theme: PROMOTING BANKABLE INVESTMENTS PORTFOLIO FOR INSURANCE AND PENSION.
As we all know, year 2020 has been a very remarkable year. A year that have been bedeviled by different crisis, ranging from the dreaded corona virus, that short down Nigeria and the world economy for many months with loss of many life and still counting, to the most recent wanton destruction of life and properties across the country caused by the ‘#EndSARS Mayhem, among many others. The impact of these crisis have resulted into the Nation GDP declining from a growth of 2.2% in 2019 to about -4% by year end.
The Government, Private sector Institutions and individuals have continued to search for economic survival strategies to change the narratives and create new normal.
Therefore, the theme for our conversation today is indeed very germane and there can be no better time to have discussions on the topic than now. We are in a time when interest rate payable on investment instruments have all crashed and many Sectors of the economy are losing value due to low returns and accelerated decline in Contributors, Policy and shareholders wealth.
In furtherance to the foregoing, the current restrictive nature of insurance and Pension Funds investment outlets calls for review of the legislations guiding investment of Insurance and Pension Fund. The yelling and plea from the Organised Private sector of Nigeria (OPSN) to create more access to investible FUNDS deserves attention.
It is worthy to note and be reminded that Insurance and Pension funds are subject to regulatory guidelines as provided in section 25 of the Insurance Act 2003 as amended and Sect 86 of the PRA 2014, for the purpose of safety and Returns. However, a consideration for review of these legislations to enable some special and Real sectors of the economy have access to Insurance and Pension fund to finance their operations, will be most beneficial to the growth and development of the Nation’s Macroeconomic activities. A deliberate policy by the authorities, in addition to what is currently obtainable, directly or through moral suasion to invest Insurance and Pension Fund in sectors such as Manufacturing, Agriculture and Aviation, etc with an inbuilt safety net, will be a welcome development.
As at 31st August, 2020, Pension Fund and Assets stood at about N11.35 trillion. Of this amount, 66.27% was invested in FGN Securities; Money market accounted for 16.6%, whilst state Bond accounts for 1.31%, all totaling 84.18%. Insurance investible Fund’s administration follows the same pattern as the pension Fund. What then is left for other sectors of the economy?
As we already know, the Insurance Industry, as Risk carrier, provides very important role as a catalyst to Nation building and risk transfer mechanism. Some operators, in recent times have given assurances to the insuring public that reported claims emanating from the EndSARS protest, among others, will be promptly honored, particularly policies with extension that cover Strike, Riot and Civil Commotions (SRCC). This is cheering news for the Industry and the Nation in general. I urge the Insurance correspondents, celebrating today to give it the desired publicity. The effect of the resultant expected increase in volume of Claims payable is a reduction in reserves and available investible Fund in the books of the Insurer.
Furthermore, it will also interest us to know that this year has witnessed unprecedented crash in Yields and interest rates payable in the Bond, Capital and Money Market. Bond rates have fallen to as low as 2.5% Pa, depending on the tenor. NTB is currently an unattractive short term investment window with a rate as low as 0.5% pa. Stock Market has its share of the economic down turn, just as the money market operations is not an exception. How can contributors, Policy and shareholders maximize their wealth and grow the economy under such situation? There is urgent need to consider alternative strategies to retool the economy for survival and growth.
Distinguished ladies and gentlemen, we have here as the Keynote Speaker, Dr Muda Yusuf, the DG LCCI, a known erudite speaker and Financial Analyst. I trust that he will do justice to this topic to the benefit of all.
In conclusion, I wish to again, thank our special and all other invited quests for honoring the Association invitation despite your very busy schedules.
I must not forget to acknowledge the presence of all the gentlemen of the press, our host in today event.
I urge you to seat back, relax and enjoy the conference.