Insurance companies, others owe banks N790bn

Insurance companies and other financial institutions are indebted to commercial banks to the tune of N790billion as at September 2015, according to the Central Bank of Nigeria (CBN)’s 2015 Quarterly Statistical Bulletin. The indebtedness of insurance companies, capital market operators and other financial organisations to banks in the country was N763, 392.26 in December 2014 and rose to N849, 595.55 in August 2015 before it went down to N790, 241.68 as at September 2015.

nairaInsurance companies’ total assets and liabilities increased by 3.2 percent to N817.6bn in the third quarter of 2015, representing increases of N25.1bn or 3.2 percent and N126.8bn or 18.4 percent above the levels reported in the preceding quarter and the corresponding period of 2014. Total liquid assets of insurance sector amounted to N152.5bn, indicating an increase of 5.2 percent above the level recorded in the preceding quarter.

The 3.2 percent increase in total assets was largely attributed to the increases of N9.9bn or 5.6 percent, N7.5bn or 5.2 percent and N5.5bn or 1.8 percent in fixed assets, liquid assets and deposit retained by ceding companies, respectively. These increases were, however, moderated by the decrease in current assets by N0.4bn or 0.3 percent.

Similarly, the expansion in total liabilities was largely accounted for by the increases of N22.2bn or 7.0 percent, N3.2bn or 4.7 percent and N1.1bn or 11.0 percent in Insurance Funds, Other liabilities and Long Term Borrowing, respectively. These increases were, however, moderated by the decreases of N0.9bn or 1.4 percent and N0.5bn or 0.1 percent in current liabilities and capital and reserve, respectively.

Total liquid assets of the companies stood at N152.5bn during the period under review, representing increases of N7.5bn or 5.2 percent and N25.9bn or 20.5 percent above the levels reported in the preceding quarter and the corresponding period of 2014, respectively.  The N7.5bn or 5.2 percent increase in liquid assets was solely accounted for by the 5.2 percent increase in bank balances. The liquid assets contributed 18.7 percent to the insurance total assets during the period under review.

The long term borrowing of the insurance business stood at N11.3bn, representing increases of N1.1bn or 11.0 percent and N1.7bn or 18.3 percent above the levels reported in the preceding quarter and the corresponding period of 2014, respectively.  The 11.0 percent increase in long term borrowing was wholly accounted for by the increase in taxation. The share of long term borrowing in total liabilities was 1.4 percent during the review period while current liabilities and capital and reserves stood at N65.3bn and N332.3bn respectively.  Aggregate deposits retained by ceding companies stood at N311.6bn, representing increases of N5.5bn or 1.8 percent and N58.4bn or 23.1 percent above the levels reported in the preceding quarter and the corresponding period of 2014, respectively.

The 1.8 per cent increase in retained deposits was accounted for by the N5.4 billion or 1.9 per cent and N0.5 billion or 2.9 per cent increases in short term investments and statutory deposit, respectively. These increases were, however, moderated by the N0.5 billion or 100.0 per cent decrease in listed ordinary shares.  Other investments of the insurance business amounted to N30.7bn in the review quarter, representing increases of N2.6bn or 9.3 percent and N5.6bn or 22.2 percent above the levels reported in the preceding quarter and the corresponding period of 2014, respectively. Other investments accounted for 3.8 percent of the total assets of the industry.

Total current assets stood at N135.8bn, showing a decrease of N0.4bn or 0.3 percent below the level reported in the preceding quarter but, an increase of N20.4bn or 17.7 percent above the level reported in the corresponding period of 2014. The 0.3 percent decrease in current assets reflected the decreases of N1.2bn or 6.4 percent and N0.5bn or 1.4 percent in outstanding premium due from and Interest, dividends and rents, respectively. These decreases were, however, moderated by the N0.9bn or 5.5 percent and N0.4bn or 0.5 percent increases in sundry debtors and amount due from reinsurers, respectively. Deposits retained by ceding companies contributed 38.1 per cent of the total assets of the insurance industry in the third quarter 2015.

Fixed Assets outlay of the insurance sector stood at N187.0bn, representing increases of N9.9bn or 5.6 percent and N16.4bn or 9.6 percent above the levels reported in the preceding quarter and the corresponding period of 2014, respectively. The expansion in fixed assets was largely accounted for by the increases of N8.2bn or 7.5 percent and N2.3bn or 3.7 percent in real estate and equipment, respectively. The rise was however due to the decrease of N0.7bn or 51.8 percent in others.

Capital and reserves of the insurance industry stood at N332.3bn, representing a decrease of N0.5bn or 0.1 percent below the level reported in the preceding quarter but, increased by N22.4bn or 7.2 percent above the level reported in the corresponding period of 2014. The capital and reserves contributed 40.6 percent to the insurance industry total liabilities during the period under review.

Total current liabilities of the insurance business stood at N65.3bn, showing a decrease of N0.9bn or 1.4 percent below the level reported in the preceding quarter but, increased by N24.1bn or 58.6 percent above the level reported in the corresponding period of 2014.

 

Source: Vanguard