Life Annuity Funds Rise To N463.1bn, Says NAICOM
Life annuity funds managed by life insurance companies rose to N463.1bn as of the end of the second quarter of 2020.
This was disclosed in a report entitled ‘Retiree life annuity: An overview of Q2, 2020’ by the National Insurance Commission.
Part of the report read, “The Retiree Life Annuity depicts marginal growth during the period under review.
“The RLA portfolio so far has recorded 83,917 contracts purchased for a total premium of N376.58bn as at end of Q2 2020.
“This depicts 2.69 per cent and 1.58 per cent growth in count and volume, respectively in Q2 2020 from end of Q1 2020.
“While the industry fund portfolio grew by 15.34 per cent from N401.51bn in Q1 2020 to N463.1bn at the end of Q2, 2020.”
Life annuity is obtained by retirees under the Contributory Pension Scheme who choose the annuity option for their monthly benefits and are paid by the insurance companies.
The commission stated that the year-on-year growth during the last three years for RLA business averaged 25.45 per cent in volume, while RLA fund portfolio growth had averaged 37.22 per cent notwithstanding the RLA payouts made (cumulative total payments of N167.2bn as at end of Q2 2020).
The graph of the annuity payouts, premium receipts and portfolio fund balance depicted a clear representation with the fund balance (N463.1bn) being higher than the cumulative premium amounts received (N376.58bn) notwithstanding the cumulative annuity payouts, it stated.
It added that further analysis of the periodical increments in the cumulative premium amounts received and RLA fund portfolio depicted the growth rate for premium receipts was receding while the growth rate for the portfolio fund balance was volatile.
This could be attributed to the volatility in interest rate.
NAICOM’s analysis indicated growth in the RLA business and a positive future outlook for the business in Nigeria.