The National Insurance Commission (NAICOM) has released new rules on annuity transactions that will take effect on February 1, 2025, to clean up that market area.
A circular detailing additional regulatory criteria for life insurance companies conducting annuity business in Nigeria was announced by NAICOM in a statement on Friday.
“An annuity is an agreement between you and an insurance provider that mandates payments from the provider, either now or in the future. In exchange for a one-time payment or a series of instalments, you receive a set sum of money for the remainder of your life.”
The goal of the circular, which was signed by Director (Innovation & Regulation) A.I. Adamu and sent to the managing directors and CEOs of all life insurance companies on January 29, 2025, is to codify best practices for how insurance institutions manage annuity portfolios.
The new regulations stipulate that insurance companies must have a minimum of one competent actuary in charge of the study of asset-liability matching and the acceptance of that analysis by the company’s investment team.

According to one section of the guidelines, “An insurer that lacks a qualified actuary in-house must arrange for a qualified actuary from an outside actuarial firm to assume the ALM responsibility on its behalf for a maximum of two years, subject to the Commission’s approval for an extension for two or more years thereafter.
“The commission must give its prior consent before a qualified actuary, either internal or external, is appointed to sign off on all ALM reports as mandated by the Prudential Guidelines’ articles 3.4.3, 7.3.1, and 8.1.5(m).
“ALM Reports: Businesses are expected to furnish the commission with ALM reports every quarter. The circular specifies obligations, such as the steps that insurers must take based on the findings of particular analyses using the NAS Standards of Actuarial Practice guidelines.”
The board of directors is in charge of making sure that insurance companies strictly adhere to the new regulations, according to NAICOM.
Additionally, according to the regulator, enterprises that cannot afford the extra costs imposed by the circular must move their annuity portfolio to another appropriate insurance provider within 180 days.
The new guidelines for the required ALM reports state that, “Without affecting paragraph seven of this circular, where an insurance company’s annuity portfolio has more than 1,000 (one thousand) annuitants or the portfolio is valued at N5 billion or more, the company shall submit to the commission the prescribed ALM report monthly, not later than the 15th of the succeeding month.”
The ALM report must be submitted to the Commission within 15 days of the end of each quarter by the reporting requirement outlined in paragraph 3.4.3 of the Prudential Guidelines.