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
Crude production under the collective Organisation of the Petroleum Exporting Countries (OPEC ) fell in May to its lowest level in at least 37 years as the blockade of Iran by the United States and disruptions in the Persian Gulf, continued to limit output.
According to a Bloomberg survey released on Friday, output from the organisation’s 11 current members, including Nigeria, dropped by 1.22 million barrels per day to 16.33 million barrels per day last month.
Iran accounted for more than half of the decline. The data excludes the United Arab Emirates (UAE), which departed the cartel last month after six decades of membership.
War between a US-Israeli alliance and Iran has reduced oil supplies from the Middle East, largely closing the Strait of Hormuz waterway. Saudi Arabia, Iraq, the UAE and Kuwait have been forced to cut crude production. Iranian shipments face additional pressure following a US blockade of its ports imposed in mid-April.
Iranian output fell by 710,000 barrels per day to a five-year low of 2.34 million barrels per day in May, the survey showed. Central Command reported that US forces have redirected 127 commercial vessels to enforce the blockade of all maritime traffic entering and exiting Iranian ports.
Kuwait recorded the second-largest decline last month, with production falling by 310,000 barrels per day to 490,000 barrels per day, less than one-fifth of pre-war levels. Saudi Arabia, the group’s leader, saw output decrease by 240,000 barrels per day to 6.57 million barrels per day.
The production reductions have not prevented OPEC and its allies from raising quotas over recent months, continuing a year-long process of restoring output halted several years ago.
This comes ahead of a meeting scheduled to be held on Sunday, June 7, where a sub-group of seven members is expected to increase targets by 188,000 barrels again in July. The session is one of four online meetings OPEC and its partners plan to hold that day.
Delegates indicated the alliance has plans for two additional monthly quota increases in August and September. UAE output rose by 300,000 barrels per day to 2.44 million barrels per day in May, according to the survey.
By Aduragbemi Omiyale
The 2025 third quarter Budget Implementation Report from the Budget Office of the Federation has shown that the federal government exceeded the funds allocation for repayment of debts for the first nine months of the fiscal year by about 18 per cent.
In a report by Punch, the sum of N10.74 trillion was budgeted for debt servicing between January and September 2025, but the government used N12.63 trillion for the purpose, N1.90 trillion or 17.65 per cent more than the allocation for the year.
The funds were spent on domestic debts, foreign debts and sinking fund by the central government in nine months.
Business Post reports that for the whole year, the amount approved by the National Assembly and signed by President Bola Tinubu for debt repayments was N14.31 trillion.
Looking at the nine-month figures, domestic debt service gulped N6.23 trillion, exceeding its N5.39 trillion provision, while foreign debt service was N6.30 trillion versus the budget provision of N5.06 trillion.
According to the report, the figures indicated that 67.2 per cent of the federal government’s retained revenue of N18.63 trillion was spent on debt service in the first nine months of 2025. When the sinking fund is included, debt-related payments consumed about 67.8 per cent of revenue.
It was also observed that aggregate federal government revenue underperformed the budget by N12.03 trillion or 39.24 per cent, as actual revenue of N18.63 trillion fell short of the N30.67 trillion projected for the first three quarters.
In the third quarter alone, the government generated N7.70 trillion versus the quarterly target of N10.22 trillion as a result of persistent oil revenue shortfalls, despite stronger non-oil collections.
The debt burden also crowded out capital spending, as total capital expenditure was N3.10 trillion in the first nine months compared with the N17.58 trillion budgeted for the period, indicating that actual debt-related payments were more than four times capital expenditure.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a loss of 1.13 per cent on Thursday, June 4, shrinking the market capitalisation by N30.03 billion to N2.630 trillion from N2.660 trillion on Wednesday.
Similarly, this brought down the NASD Unlisted Security Index (NSI) by 50.19 points to 4,396.08 points from the 4,446.27 points recorded a day earlier.
The loss was influenced by the overpowering of the bulls by the bears, after the bourse closed with two price gainers and three price losers, led by FrieslandCampina Wamco Nigeria Plc, which slumped by N20.03 to sell at N190.38 per unit compared with midweek’s N210.41 per unit. Food Concepts Plc declined by 25 Kobo to trade at N2.50 per share versus the previous day’s N3.00 per share, and Acorn Petroleum Plc crumbled by 2 Kobo to end at N1.32 per unit, in contrast to the preceding session’s N1.34 per unit.
For the gainers, Central Securities Clearing System (CSCS) Plc added N2.93 to close at N78.34 per share compared with the previous price of N75.41 per share, and Afriland Properties Plc gained 80 Kobo to settle at N16.80 per unit versus N16.00 per unit.
There was a slip in the volume of transactions yesterday by 46.8 per cent to 280,714 units from 527,221 units, as the value of trades dropped 66.5 per cent to N21.8 million from the preceding session’s N64.2 million, and the number of deals fell by 8.7 per cent to 42 deals from 46 deals.
Great Nigeria Insurance (GNI) Plc ended the session as the most traded stock by value on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 64.7 million units traded for N4.4 billion.
GNI Plc also finished the day as the most traded stock by volume on a year-to-date basis with 3.4 billion units valued at N8.4 billion, followed by Infracredit Plc with 2.3 billion units exchanged for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
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