Overview

The National Insurance Commission (NAICOM) issued Circular No. NAICOM/DIR/CIR/59/2025 on 29th January 2025, titled 'Additional Regulatory Requirements for Underwriting of Annuity Business in Nigeria.' This circular is addressed to all life insurance companies in Nigeria and introduces enhanced regulatory measures for insurers engaged in annuity business. The requirements supplement existing provisions in the Prudential Guidelines (paragraphs 3.4.1–3.4.3, 7.3.1–7.3.3, and 8.1.1–8.1.3) and aim to promote best practices in managing annuity portfolios. Key requirements include: - An insurer must have at least one Qualified Actuary (as defined in Appendix 1) who is statutorily responsible for Assets-Liability Matching (ALM) analysis and its implementation by the investment team. - If an insurer lacks an in-house Qualified Actuary, they may engage an external actuary for a maximum interim period of two years, subject to Commission approval for extensions. - The appointment of any Qualified Actuary (in-house or external) requires prior Commission approval. - ALM reports must include specific analyses: relative sizes of asset portfolio and best estimate liabilities (BEL), annualized net cash flow analysis, duration gap and relative duration gap, and stress tests of +/-300 and +/-600 basis points to the NAS risk-free yield curve. - Results must be compared with a matrix in Appendix 2 to determine required actions, which must be implemented immediately upon identification. Failure to comply constitutes a violation and may result in regulatory sanctions and penalties. - ALM reports must be submitted quarterly within 15 days after each quarter-end. For insurers with over 1,000 annuitants or a portfolio valued at ₦5 billion or more, monthly submission is required by the 15th of the succeeding month. - Insurers must hold at least monthly meetings between actuarial and investment functions to discuss the ALM report and compliance with regulatory requirements. The circular emphasizes the Commission's commitment to ensuring a safe, sound, and stable insurance sector in Nigeria.

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