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Financial Services

Here’s what will happen to Nigeria’s insurance sector in the short to medium term

The Nigerian insurance sector is expected to grow at a subdued rate in 2020 due to the COVID-19 pandemic.



Nigeria's Insurance Sector

The Nigerian insurance sector is expected to witness considerable growth in the medium to long term, despite an interruption in 2020 due to the COVID-19 pandemic.

In specific terms, players in the smaller life insurance segment of the market are expected to grow their collective premiums by 4.8% to N179.81 billion in 2020. This is a downwardly revised forecast due to the country’s weakened economic condition. Meanwhile, the life insurance segment is expected to grow its premiums to as much as N207.96 billion by 2024.

On the other hand, the non-life insurance segment of the market (which is significantly larger), is projected to grow its premiums by a revised 2.9% to N248.85 billion in 2020. In the medium term, growth in the non-life segment is expected to reach N321.53 billion in 2024.

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Nigeria's insurance sector

It should, however, be noted that these projected growths are not going to come about easily, mainly due to Nigerians’ general lack of enthusiasm for insurance. According to Fitch Solutions, premiums growth will continue to be limited due to expected low average earnings by the insurance firms.

Widespread poverty was identified as a major factor making it impossible for a lot of Nigerians to access insurance covers. But then again, some wealthy Nigerian are known to avoid spending on insurance covers. This general lack of enthusiasm is known to hamper growth in the Nigerian insurance sector. The report, therefore, called for more action to be taken towards educating Nigerians about the importance/benefits of both life and non-life insurance.

READ MORE: Lagoon and Blue Ocean narratives of Nigerian Insurance sector – Report 

“With a market supported by the country’s steady economy and large population, Nigeria’s insurance sector will enjoy a period of growth and development over the medium and long term, albeit interrupted by a slower pace of growth in 2020 due to the effects of the coronavirus pandemic. The outlook for premiums growth, however, continues to be limited due to low average earnings and widespread poverty, which will weigh on insurance affordability. As even the more affluent middle-class consumers tend to avoid purchasing insurance, which hampers the growth of compulsory basic insurance lines such as motor vehicle insurance, Nigeria’s potential consumer base needs to be educated more about the benefits of both life and non-life insurance coverage to support more robust growth in the sector.

“In spite of Nigeria’s large population, only a small proportion purchases life insurance. Life premiums currently account for 41.9% of overall insurance spending in the country. Low incomes and a lack of understanding of the benefits of life insurance remain the most important obstacles facing life insurers. However, a recovering economy, coupled with rising employment and incomes, will drive demand for life insurance products over the forecast period,” part of the report said.

In view of the competitive and regulatory landscapes, Fitch Solutions noted that the insurance sector in Nigeria is replete with mostly small players. The highly fragmented nature of the market makes it very competitive, even though only a few really command a greater percentage of the market share. In total, there are approximately 57 insurance companies in Nigeria and the report forecasted that the number may shrink in the coming years due to possible mergers/acquisitions.

Note that the National Insurance Commission, NAICOM, had recently revised its capital requirements for various segments of players in the insurance. You may keep up with that development by clicking here.

In the meantime, foreign players have been showing serious interest in the Nigerian insurance sector. A typical example is the French insurance firm – AXA which has stakes in Nigeria’s  AXA Mansard Insurance Plc. Other examples are South Africa’s Old Mutual Ltd and Sanlam Emerging Markets (Proprietary) Ltd. As Nairametrics reported, Sanlam recently took over full ownership of FBN Insurance Ltd after FBN Holdings Plc divested all its stakes in the insurance firm which used to be one of its many subsidiaries.

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Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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Financial Services

Jim Ovia is set to earn N9.58 billion in dividend for FY 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock.



Jim Ovia: From a clerk to founder of Nigeria's most profitable bank

The founder and Chairman of Zenith Bank Plc, Mr. Jim Ovia is expected to earn a massive sum of N9.575 billion in dividend for the financial year ended December 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock out of the 31,396,493,787 ordinary shares available. This gives him an 11.29% direct interest in the Tier -1 bank.

It’s however important to note that such dividend is subject to a 10% withholding tax in Nigeria.

READ: Is Zenith Bank thriving on the strength of sound financial indices?

Recall that about a day ago, the Board of Directors of the bank in a statement released via the Nigerian Stock Exchange proposed a final dividend of N2.70, amounting to a total payout of N3.00 per share for the financial year 2020 (interim: N0.30).

This proposal reflects the past year’s robust performance and appears to signal that Zenith bank remains well-positioned to perform in the current financial year. However, there was a lower payout ratio at 40.9% compared to FY’19 (42.1%).

  • Key earnings drivers to the financial year performance under review were a 90 basis points drop in the cost of funds to 2.1%, which propelled net interest income (+12.2% YoY) and a 3.8x jump in revaluation gains to N43.4 billion.
  • These offset pressures from operating costs (the cost to income ratio rose 1.2ppts to 50.0%) and impairment charges (cost of risk rose 40basis points to 1.5%)

READ: Jim Ovia: From a clerk to founder of Nigeria’s most profitable bank

Described as the ‘Godfather of banking in Nigeria’ by Forbes Africa, Jim Ovia is quite popular for his business dexterity and leadership skills, especially in the banking sector.

His early interest in technology was the reason Zenith Bank became the first Nigerian company to have a functional website in 1995 and was able to smoothly migrate its operations from analog times to a digital era.

From a single branch in a residential building, Zenith Bank now has hundreds of branches all over Nigeria and several subsidiaries in other countries. The bank became a Public Limited Company in 2001 and was listed on the Nigeria Stock Exchange (NSE), and later on the London Stock Exchange (LSE).

On the 27th of April 2007, Zenith Bank Plc became the first Nigerian bank in 25 years to be licensed by the UK Financial Services Authority (FSA), giving rise to Zenith Bank UK Limited.

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Financial Services

Zenith Bank declares final dividend of N84.8 billion for shareholders

Zenith Bank declares final dividend of N84.8 billion for shareholders for 2020.



Zenith Bank Plc

The Board of Directors of Zenith Bank Plc has announced the payment of a final dividend of N2.70 for every share of 50k held by shareholders, amounting to a total of N84.8 billion for the year ended 2020.

This is according to a disclosure signed by the company’s secretary, Michael Osilama Etu and sent to the Nigerian Stock Exchange.

According to the notification, the final dividend will be paid electronically to shareholders on the 16th of March, 2021, subject to appropriate withholding tax and approval from the Company’s Annual General Meeting. Other pre-requisite conditions for payment are;

  • Only shareholders whose names appear in the registrar of members as at the close of business on 8th of March, 2021 will be considered.
  • Shareholders must have completed the e-dividend registration and must have mandated the Registrar (Veritas Registrar Limited) to pay their dividends directly into their bank accounts.
  • In lieu of this, it is pertinent to note that the register of shareholders will be closed on 9th of March, 2021.

Zenith Bank Plc had earlier paid an interim dividend of 30k to its qualified shareholders on 22nd of September, 2020, thereby raising the total dividend declared by the financial giant in 2020 to N3.00, indicating an increase of about 7.1% when compared to the total dividend of N2.80 declared in 2019.

What you should know

  • Zenith Bank reported a profit before tax of N255.9 billion for FY 2020, indicating a growth of 5.2% YoY
  • It also posted a Profit After Tax figures of N230.6 billion for the period under review, indicating a growth of 10.4% YoY.
  • It has total shares outstanding of 31,396,493,787 and officially closed trading today with a share price of N26.

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