Section 24: Solvency margin, etc.

(1) An insurer shall in respect of its business other than its life insurance business, maintain at all times a margin of solvency being the excess of the value of its admissible assets in Nigeria over its liabilities in Nigeria consisting of-
(a) provisions for unexpired risks;
(b) provisions for outstanding claims ;
(c) provisions for claims incurred but not yet reported; and
(d) funds to meet other liabilities.
(2) The solvency margin referred to in subsection (1) of this section shall not be less than 15 per centum of the gross premium income less reinsurance premiums paid out during the year under review or the minimum paid-up capital which ever is greater.
(3) For the purpose of calculating the solvency margin, all moneys owned by policy holders brokers or agents by way of premiums due to but not received by the insurer as at the end of the relevant year shall not count as admissible assets or be included in determining qualifying liabilities.
(4) Any amount due as liability to reinsurers which are attributable to outstanding premiums in respect of the current year excluded under Section (3) of this section shall be excluded from liabilities.
(5) Where the Commission finds that the solvency margin of an insurer has fallen below the margin stipulated in this section it shall forthwith direct the insurer to make good the deficiency by way of cash payment into its accounts and satisfactory evidence of such payment shall be produced to the Commission within 60 days of the receipt of the directive.
(6) If satisfactory evidence of payment is not produced to the Commission within the time stipulated in subsection (5) of this section, the insurer shall not undertake a new insurance business until it produces satisfactory evidence of payment to the Commission.
(7) Failure to make payment and produce satisfactory evidence of the payment as required under subsections (5) and (6) of this section, within a period of 60 days of the receipt of the direction, shall constitute a ground for the cancellation of the registration of an insurer under section 8 of this Act.
(8) An insurer who transacts a new insurance business in contravention of subsection (6) of this section shall be liable to have its registration cancelled under section 8 of this Act notwithstanding that the period of 60 days referred to in subsection (7) of this section has not expired.
(9) An auditor who audits a balance sheet profit and loss and revenue account of an insurer under section 28 of this Act shall issue a certification stating the extent to which the insurer has satisfied the margin of solvency required under this section.
(10) If the Commission is not satisfied with a certification issued under subsection (9) of this section, it may conduct an independent investigation on the matter with a view to determining what action to take against the insurer or the auditor.
(11) Where an investigation conducted under subsection (10) of this section discloses a false certification by an auditor, the Commission may make a report on the auditor to the appropriate professional body for necessary disciplinary action.
(12) Where an insurer or reinsurance company fails to account of it being insolvent, any auditor or official of the Commission who in the 3 previous years certifies the said company as being solvent shall be held liable.
(13) In this Section-
"admissible assets" means assets designated as admissible assets consisting of the following-
(a) cash and bank balance ;
(b) quoted investment at market value ;
(c) unquoted stock at cost;
(d) land and buildings ;
(e) furniture and fittings;
(f) office equipment;
(g) motor vehicles;
(h) prepaid expenses made to member of staff;
(i) amount due from retrocession;
(j) staff loans and advances; and
(k) claims receivable.