The enforcement of Group Life Insurance and annuity business have continued to add impetus to the revenue of life insurers as investors wager that rising interest rates will boost profitability.
AIICO Insurance Plc, Custodian Insurance Plc, Mutual Benefit Assurance Plc, AXA Mansard Plc, and Royal Exchange Plc, collectively generated N95.04 billion in premium income in the first nine months of the year, which is 19.05 percent higher than 2021’s N79.83 billion, according to data gathered by MoneyCentral.
Analysts say annuity business is the major driver of life premiums, representing the growing number of retirees taking Pension Reform Act 2014.
The Pension Industry has been growing on the back of rapidly growing population, greater allocation of pension assets to equities and real assets,
The industry Asset Under Management (RSA AUMs + Other non-RSA funds) has grown at a 22% CAGR between 2007 and 2021 (a 15-year period) to N13.42 trillion in 2021 ($30.86bn, CAGR of 11%) on the back of rising number of RSA holders, new inflow of funds (contributions less withdrawals) into the funds and net investment gains.
There are indications rising interest rates will bolster investment income and capital positions of Life insurers, which means these firms will be paying their shareholders a dividend.
The monetary policy rate (MPR) has been increased to 16.5% from 15.5% in line with Broadstreet analysts’ consensus and the International Monetary Fund, IMF, expectation in a fight to curb the worsening consumer price index.
AIICO Insurance’s premium income from the Life segment was up 12.35 percent to N41.30 billion in September 2022 from N36.76 billion as at September 2021.
Custodian Insurance’s premium income from Life business increased by 15.33 percent to N29.78 billion in September 2022 from N25.82 billion the previous year.
Mutual Benefit’s premium income from the Life segment spiked by 32.17 percent to N10.64 billion in the period under review from N8.05 billion the previous year.