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.
By Adedapo Adesanya
The Nigeria Customs Service (NCS) is seeking a reduction in import duty exemptions, which rose to N34 trillion, limiting its ability to increase its revenue generation threshold.
The Comptroller-General of the Customs Service, Mr Adewale Adeniyi, disclosed that the value of import duty exemption certificate approvals increased to that level in 2025, describing the policy as one of the major factors restricting its revenue generation.
At an investigative session of the Senate Committee on Finance with revenue-generating agencies in Abuja on Monday, Mr Adeniyi explained that government fiscal policies have continued to impact the revenue-generating capacity of the Customs Service, both positively and negatively.
“The NCS would have generated significantly higher revenue over the years if not for government-approved import duty waivers and other external factors affecting collections,” he said.
He added that the Import Duty Exemption Certificate scheme, introduced in March 2020, accounted for about N34 trillion in approvals in 2025, with nearly 60 per cent covering duty-free importation of military hardware due to Nigeria’s prevailing security challenges.
Other government-backed duty waivers, he noted, covered the importation of Compressed Natural Gas (CNG), electric and hybrid vehicles, healthcare equipment and medical supplies, industrial machinery and manufacturing inputs, as well as food import intervention programmes.
While acknowledging the impact of the waivers on Customs revenue, Mr Adeniyi argued that fiscal policy should not be assessed solely on the basis of revenue generation but also on its broader economic and social objectives.
He, however, urged the federal government to establish stronger monitoring mechanisms to ensure beneficiaries of duty waivers deliver the intended economic outcomes, including lower consumer prices, increased local production and improved healthcare access.
The committee also expressed displeasure over the absence of several heads of government agencies invited to the hearing, including the Nigerian Civil Aviation Authority (NCAA), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Industrial Training Fund (ITF), and the Federal Medical Centre (FMC), Jabi.
The Chairman of the Senate Committee on Finance, Mr Sani Musa, warned that the affected chief executives must appear at the committee’s next sitting or face severe sanctions under the Senate’s rules.
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By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange rose by 0.40 per cent on Monday, July 13, buoyed by buying interest in 11 Plc, Central Securities Clearing System (CSCS) Plc and UBN Property Plc, which offset the profit-taking in Food Concepts Plc, the parent company of Chicken Republic.
11 Plc gained N20.69 to end at N227.64 per share compared with last Friday’s price of N206.95 per share, CSCS Plc grew by N1.83 to N91.48 per unit from N89.65 per unit, and UBN Property Plc added 1 Kobo to sell at N1.81 per share versus N1.80 per share.
On the flip side, Food Concepts Plc depreciated by 24 Kobo to close at N2.45 per unit, in contrast to the preceding session’s N2.69 per unit.
As a result, the market capitalisation increased by N9.2 billion to N2.587 trillion from N2.578 trillion, and the NASD Security Index (NSI) improved by 15.33 points to 4,311.67 points from 4,296.34 points.
Yesterday, the volume of securities traded by investors surged by 615.9 per cent to 9.1 million units from the previous 1.3 million units, and the value of securities rose by 997.1 per cent to N320.4 million from the preceding session’s N29.2 million, while the number of deals decreased by 12.5 per cent to 28 deals from last Friday’s 32 deals.
At the close of trades, Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 73.9 million units exchanged for N5.2 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
