Economy
5 Insurance Firms in Trouble over Huge Management Expenses, Shareholders React
By Modupe Gbadeyanka
The inability to curtail their management expenses which surpasses their premium income may lead at least five insurance companies operating in the country into trouble.
According to Leadership Newspaper, the industry regulator, the National Insurance Commission (NAICOM) is not happy with the development because it had been persuasive in its approach to insurance companies to cut down on their management expenses and if this act affects their solvency margin, which would make them deep hands into their shareholders’ funds to run the affairs of the respective firms, NAICOM would be left with no other option than to sanction the affected insurers.
According to data sourced from the umbrella body of operators, the Nigerian Insurers Association (NIA), NICON Insurance Company Limited, in its 2016 financial year, generated N92 million gross premium and spent N453.7 million, translating to 4.93 percent on management expenses, while Old Mutual Life Assurance Company Limited had N1.30 billion gross premium and spent N1.83 billion, representing 1.41 percent on management expenses.
SpringLife Assurance Plc, on its part, had N32 million premium income and spent N105.2 million on its management in the same financial year, UNIC Insurance Plc had N38.7 million gross premium income and spent N244.9 million with Investment & Allied Insurance Plc having N4.3 million gross premium and spent N169.4 million on its management.
The regulatory body had earlier placed the likes of International Energy Insurance(IEI) Plc, Industrial and General Insurance(IGI) Plc, among others, on financial restriction, after it was observed that the companies deep hands into their shareholders’ funds, and would not hesitate to do same to these five insurers, if found culpable.
NAICOM had earlier said, from the observation made on financial accounts submitted by some companies, those with huge expenditure profiles have been mandated not to spend beyond certain limits.
The decision, according to the Commissioner for Insurance, Mr Mohammed Kari, was taken to ensure companies do not spend unnecessarily to the extent that they would not be able to attend to claims settlement.
He expressed his sadness over the continuous increase in management expenses of underwriting firms across the country, stating that, this is affecting their ability to give good returns on investment to their investors.
When contacted by Leadership, spokesperson of NAICOM, Mr Rasaaq Salami, said the regulatory body was unhappy over the consistent increase in management expenses of the insurance industry, but that, the regulatory body has adopted a persuasive approach to tell them to cut down on their management expenses.
According to him, “Of course, it’s their business, but where we have issue is if it affects their solvency margin and they deep hands into their shareholders’ fund.
“But the board of these companies are expected to curtail the spending of their respective management to ensure that they continue to give values to their shareholders.”
He also said NAICOM was working to address the issue of overriding commission which is also part of the expenses.
Earlier, President of Progressive Shareholders Association of Nigeria (PSAN), Mr Boniface Okezie, said most insurance companies have yet to give good returns on investment to shareholders and investors, partly due to incurring huge management expenses as well as payment of huge fines to the regulatory bodies for default in the submission of their financial accounts.
He said shareholders react to the results a company releases, its dividend payout, its future prospect, saying insurance companies have failed in all these.
He believes insurance firms are the architect of their misfortune, saying, the money they use to pay fines and spend on management expenses on a yearly basis can comfortably give meaningful dividend to shareholders.
But the national coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, felt otherwise, believing that the huge expenses are duly incurred in a bid to get good hands.
According to him, any company that wishes to attract best hands and retain them should be ready to pay.
He noted that the acclaimed huge management expenses is often incurred in a bid to engage capable personnel to drive affairs of organisations, stressing that good services are not cheap anywhere in the world and that organisations that want to be at the top should be ready to pay for the services of professionals.
“If you want the best you have to pay for it. If any regulator is coming to take up an executive job, in some of these companies, you need to know how much such person would earn and the salary becomes personal to that person.
“The regulator cannot just be in its cosy office and say management expenses are high. Go and ask for the regulators audited accounts, you would see certain things that you would not believe,” he said.
Meanwhile, most of the affected companies have been battling for survival owing to breakdown of corporate governance, while some are under regulatory intervention.
Aduragbemi Omiyale
A Nigerian-based investment banking and advisory company, PAC Capital Limited, has promised transformative financial solutions that not only meet but exceed expectations of its clients.
This assurance was given by the Executive Director of PAC Capital, Mr Bolarinwa Sanni, after the firm was named as the Best Transaction Advisory Firm – Nigeria 2025 by the International Business Magazine Awards.
The award was in recognition of its consistent track record in structuring and executing high-impact transactions across various sectors, including infrastructure, energy, transport, and financial services.
This international recognition highlights the organisation’s commitment to excellence, innovation, and delivering value-driven advisory services.
“Winning this award reflects the strength of our advisory team and the boldness of the clients we serve.
“At PAC Capital, we are committed to delivering transformative financial solutions that not only meet but exceed expectations.
“This recognition inspires us to keep pushing boundaries and shaping Africa’s investment landscape,” Mr Sanni stated.
Also, the Managing Director of PAC Capital, Mr Humphrey Oriakhi, said, “This award is a strong validation of our efforts to lead with insight, integrity, and innovation in the transaction advisory space.
“We are truly honoured to be acknowledged on a global platform. I dedicate this achievement to our clients who trust us with their most strategic decisions and to our team whose dedication fuels our success.”
By Adedapo Adesanya
The chief executive of Ecobank Transnational Incorporated, Mr. Jeremy Awori, has called for an increase in intra-trade among African countries in response to recent tariff announcements by the US President, Mr Donald Trump.
Speaking in an interview with Bloomberg TV, Mr Awori noted that Mr Trump’s tariffs would replace the African Growth and Opportunity Act (AGOA), which about 30 African nations have relied on to develop export-driven industries, including textiles and apparel.
“Now more than ever we should be focusing as African countries on how do we trade more together, how do we create an easier framework for us to trade,” he said.
In 2023, sub-Saharan Africa exported $29 billion worth of goods to the U.S., making it the region’s fourth-largest market after China, the United Arab Emirates, and India.
According to him, while the US is not Africa’s biggest trading partner, the continent’s economies could still face indirect repercussions if the tariffs lead major partners like China to reduce demand for African exports.
The tariffs imposed on African nations vary widely, ranging from 10 per cent for countries like Benin, Kenya, and Cape Verde to as high as 50 per cent for Lesotho—the highest rate applied to any sovereign nation. Nigeria was hit with 14 per cent.
Mr Awori pointed out that the trade tensions reinforced the urgency for African nations to fast-track the implementation of the African Continental Free Trade Area (AfCFTA), which came into effect in October 2022.
He added that fully implementing the free trade accord and adding value to raw materials will ensure that the continent keeps “more of the benefits, creates more jobs and uplifts the lives and livelihoods of Africans.”
He emphasised that beyond tariff reductions, Africa must address non-tariff barriers such as restrictive visa policies and logistical challenges faced by landlocked countries.
The lender’s CEO noted that the new tariffs follow President Trump’s earlier decision to freeze aid to Africa, which Ecobank research suggests could push an additional six million people into extreme poverty.
By Aduragbemi Omiyale
Data from the Debt Management Office (DMO) showed that the Nigerian government used about N13.12 trillion to service the various debts in 2024.
Business Post reports that this was 68 per cent higher than the N7.8 trillion paid by Nigeria to pay interests on debts in 2023 and higher than the N12.3 trillion approved by the National Assembly for last in the 2024 Appropriation Act.
Over the weekend, the DMO revealed that the total debt of the country as of December 31, 2024, stood at N144.67 trillion versus N97.34 trillion a year earlier.
This comprised an external debt of N70.29 trillion and a domestic debt N74.38 trillion.
The agency stated that the significant increase in the debt service was due higher interest rates and increased domestic borrowing as well as rising global interest rates and the depreciation of the Naira, which has made dollar-denominated debt more expensive to service.
About N5.97 trillion was used to funds borrowed by the government from domestic investors, higher than the N5.23 trillion used for the same purpose in 2023 by 14.15 per cent, while N7.15 trillion was used for paying interest on foreign loans, higher than the N2.57 trillion in 2023 by 167 per cent.
Analysis showed that about N4.69 trillion was paid to local investors for giving the federal government money to fund the 2024 budget deficit from the sale of FGN bonds at the local capital market versus the N3.66 trillion recorded a year earlier.
Following the FGN bonds was treasury bills, which recorded the use of N747.15 billion for the payment of interest to investors compared with N326.12 billion in 2023.
Debt servicing for FGN Sukuk gulped N158.43 billion last year, the sum of N6.38 billion was used to pay interest to investors who subscribed to the monthly FGN savings bonds, and N2.18 billion was for FGN green bonds, with N265.86 billion for promissory note principal repayments.
In the 2025 budget, the federal government has allocated about N16 trillion for debt servicing.
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