The Nigerian insurance sector recorded portfolio investment worth N762 billion in 2017.
The 2018 Nigerian Insurance Industry report released by Agusto & Co. indicated that sector grew the investment portfolio in the sector by eight per cent.
A breakdown of the industry’s investment portfolio showed a 44 per cent allocation to government securities, 18 per cent in bank placements and deposits, 16 per cent in real estate, seven per cent in subsidiaries and six per cent each in quoted and unquoted investments.
“Despite growth in the industry’s investment portfolio, a rise in yields and significant investments in treasury bills, the average returns on investments remained below 10 per cent,” it stated.
The report cited inefficient investment management strategies as the main factor that resulted in the low returns for the industry.
With an average investment yield of about nine per cent in 2017, it stated that the real returns was negative considering that inflation closed at 15.37 per cent same year.
“In addition, the average yield of 364 days treasury certificates of about 13per cent in 2017 was significantly higher than the industry’s average returns on its investment portfolio.
“Investment manager’s inputs are only made after the fact. Some investment officers who carry out daily investment operations are not adequately equipped for the positions they hold and are not trained in the management of investment securities in the capital and money
markets.
“In their opinion, the recruitment process for key positions such as investment manager in the Insurance industry should be improved while regular trainings need to be held for staff,” it added.
Furthermore, the report noted that limited investment options also plagued the investment performance of the sector.
