Economy
African Alliance Insurance May Get Fresh N7bn Injection Amid Solvency Margin Deficiency
By Aduragbemi Omiyale
One of the underwriting companies in Nigeria, African Alliance Insurance Plc, has disclosed that it is almost getting fresh capital of up to N7 billion from “an independent investor” to help shore up its capital base.
The firm revealed this in its audited financial statements for the year ended December 31, 2022, filed to the Nigerian Exchange (NGX) Limited and analysed by Business Post.
The external auditors, Ukwuegbu, Ogbeleje & Co, in their note, pointed out that the existence of African Alliance Insurance was at risk because of a deficiency in its solvency margin.
A solvency margin is the equivalent of a capital adequacy ratio (CAR) in the banking sector, which measures the minimum capital base of an organisation in the financial institution.
In summary, solvency margin is a minimum excess on an insurer’s assets over its liabilities set by regulators, in this case, the National Insurance Commission (NAICOM).
For underwriters operating in the life insurance business in Nigeria, they are required to have a solvency margin of N2 billion, but African Alliance Insurance has a negative solvency margin of N4.04 billion.
In its comments in its report on the financial statements, the auditors said, “Without modifying our opinion, we draw attention to note 5.5 to the financial statements which indicate negative solvency margin of N4.04 billion. This is below the minimum regulatory capital of N2 billion required for a life insurance business.
“The total admissible assets of the company less the net insurance and investment contract liabilities were a deficit of N29.8 billion as of December 31, 2022. These conditions indicate the existence of a material uncertainty that may cast doubt on the company’s ability to continue as a going concern.”
But the company said it has taken some capital management policies to address the issue raised by the auditors, including the “maintenance, as a minimum, of capital sufficient to meet the statutory requirement,” and “maintenance of an appropriate level of liquidity at all times.”
“The company further ensures that it can meet its expected capital and financing needs at all times, having regard to business plans to guarantee its going concern status, forecast and any strategic initiatives,” it added.
The insurance company noted that its “board of directors are at the final stages of concluding arrangement with an independent investor with plans to inject about N7 billion into the company as fresh capital,” noting that “the process involves the conduct of due diligence on the financial statements of the company.” The board also emphasised that the success of this transaction is not under its control and “there is material uncertainty as to the probability that this transaction will succeed.”
A look at the performance of the firm in the fiscal year under review showed that its gross premium written (GPW) shrank by 5.56 per cent to N6.8 billion from N7.2 billion in the 2023 financial year due to lower earnings from its individual life insurance product, as gross premium income slightly moved up to N7.1 billion from N7.0 billion.
In the year, the insurer suffered a loss before tax of N2.9 billion versus a pre-tax profit of N2.2 billion in 2021, just as it closed the period with a net loss of N2.9 billion in 2022 compared with a net profit of N2.4 billion in 2021 fiscal year.
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.
