Jaiz Takaful Insurance Limited, a pioneer in Nigeria’s Islamic insurance sector, has declared a record surplus of N230.8 million for the 2022 financial year, marking a significant milestone for the company despite a volatile economic environment.
This figure represents a 51.2 per cent increase compared to the N152.6 million surplus declared in 2021.
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Speaking at the surplus distribution event in Abuja on Wednesday, the Chairman of Jaiz Takaful, Zainab Abdurrahman, described the achievement as a testament to the company’s prudent management, participant loyalty, and adherence to the Islamic principles of fairness and cooperation.
“We are pleased to announce a surplus of N230,806,451.75, reflecting a 51.2 per cent increase over the surplus declared in 2021 of N152,596,760.88,” she said.
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She attributed the achievement to the company’s resilience amidst economic challenges and its adherence to Islamic principles of transparency, fairness, and cooperation.
“This achievement serves as evidence of the prudent management of our Takaful fund, the loyalty and trust of our participants, the dedication of our staff, and the unwavering support, guidance, and cooperation of the Board,” Mrs Abdurrahman said.
She said that the surplus, derived from Takaful operations, underscores the firm’s commitment to delivering value to participants while navigating the constraints of Nigeria’s economic environment.
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The chairman explained that General Takaful operations contributed the largest portion, amounting to N62.38 million, followed closely by the Motor Takaful class, which accounted for N60.01 million.
She said that while certain Takaful classes, including Agriculture, General Accident, and Marine, showed notable growth, they did not generate a surplus for the year. Similarly, the Erection All Risk and Contractor All Risk classes also did not yield any surplus.
However, Family Takaful operations, covering both Individual and Group Takaful classes, recorded significant progress, generating a total of N58.15 million. This performance, she emphasised, reflected the prudent management of funds and the dedication of the organisation to its participants.
She emphasised the importance of surplus distribution in reinforcing Islamic finance principles and fostering trust among participants.
“We are fulfilling not only our contractual obligations but also reinforcing the principles of Islamic finance, which emphasise fairness, transparency, and justice. We are reaffirming our motto of Sharing and Caring,” she added.
Risks
The Managing Director, Ibrahim Shehu, explained the distinct model of Jaiz Takaful’s risk-sharing mechanism.
Unlike conventional insurers, he said, Jaiz Takaful pools contributions from participants, deducts claims, expenses, and reserves, and proportionately redistributes the remaining surplus.
“In the conventional market, it is called underwriting profit. In that kind of business, it would have been profit to the shareholders, but in our own business, because the fund belongs to the customers, whatever that is remaining belongs to the customer. So we share the net residual to the customers in the proportion in which they pay their contribution at the beginning,” Mr Shehu said.
He said those who contribute more receive higher proportions of the surplus, while smaller contributors also benefit fairly.
This model, he said, ensures that every participant gains value, which is unparalleled in conventional insurance.
Despite the success, the MD acknowledged significant challenges, including forex volatility, deregulation, and limited disposable incomes.
“There are challenges. First, the environment, the volatility in the market, which is very, very critical. And we all know that there has been consistent instability in the economy, especially Forex.
“Forex is the major challenge we had. Then allowing market forces to determine some prices of mutual economic ingredients in Nigeria actually affected our business. And so therefore insurance comes as secondary to most Nigerians.
“It is the disposable income that you have that you’ll be able to patronize insurance. If you’re struggling to make ends meet, you don’t think about insurance,” Mr Shehu said.
However, he said the company has been innovative in navigating these obstacles. For example, Agriculture Takaful, though newly introduced, holds immense potential to support farmers in mitigating risks and boosting productivity.
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Projections
The chairman revealed that the value of the company’s current operation exceeds N2 billion but expressed optimism for growth, stating, “We are aiming to achieve a production of about N6 billion.”
She also explained that surplus sharing depends on claims activity within specific categories, noting that participants in categories with fewer claims benefit more from the surplus.
Additionally, she disclosed that the company currently has a customer base of nearly 5,000, with an ambitious goal to expand to one million participants by 2030.
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