Foreign insurers with presence in Nigeria, including Allianz and SUNU Group, have thrown their weights behind their local subsidiaries in the ongoing recapitalisation exercise set for underwriting firms in the industry.
The foreign investors, which have continued to reaffirm their commitment to the Nigerian market, said they are willing to conform to local regulations that ensure their stability and growth in the continent.
The Allianz Group, one of the world’s largest investors managing around €673 billion, said Allianz Nigeria, its local operating entity, will recapitalise to N20 billion by close of account in 2019.
Coenraad Vrolijk, regional chief executive officer, Allianz Africa, during his recent visit to Nigeria told BusinessDay in an interview that Allianz Global would make sure that Allianz Nigeria conforms to local regulation. Vrolijk said plans had been concluded to recapitalise Allianz Nigeria and it had been approved.
Being the largest shareholder with about 99.6 percent stake in the company, “we will drop the money”, Vrolijk said.
“We will do over N18 billion as required of composite insurers, maybe around N20 billion before the close of accounts in 2019,” he said.
“We are doing similar recapitalisation in CIMA Region, Ghana and Kenya. As Allianz, we are committed to the Nigerian market and we are going to put the money down,” he further said.
SUNU Assurances Nigeria plc, a member of SUNU Group, has also received the assurance of its parent company for funding to meet the recapitalisation target before the deadline of June 30, 2020.
Samuel Ogbodu, managing director/CEO of SUNU Assurances Nigeria plc, said the insurer would exceed the N10 billion regulatory requirement on recapitalisation to underwrite all classes of general business.
Ogbodu said in order to meet the recapitalisation regime of N10 billion for general business, the company was going through the route of rights issue.
He stated that the Sunu Group based in Paris, France, owned 65 percent of the company and has given its commitment to pick up the 65 percent of the rights.
National Insurance Commission (NAICOM) had on May 20, 2019 increased the minimum paid-up share capital of insurance companies in Nigeria, requiring the existing 59 underwriting firms to shop for capital to comply.
In the new capital regime, life companies’ capital was increased from N2 billion to N8 billion, general business from N3 billion to N10 billion, composite business from N5 billion to N18 billion, and reinsurance companies from N10 billion to N20 billion.
According to the Commission, the minimum paid-up share capital requirement would take effect from the commencement date of the circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies would be required to fully comply not later than June 30, 2020.
In a circular dated July 23, 2019, NAICOM further stated that the recapitalisation plan should include, among others, capital status of the companies as at the last audited financial statements, board resolution on how to comply with the directives, and detailed action plan on how the funds for the recapitalisation are to be sourced with timeline and deliverables.
The circular also directed that companies intending to seek funds from the capital market were required to submit their plan of action on a file-and-use basis, just as “companies that intend to merge or acquire another should submit their proposal after which they must comply with Section 30 and 31 of the Insurance Act 2003”.
Meanwhile, NAICOM has reviewed insurers’ individual submissions on recapitalisation plan and has since given those with clear plans ‘no objection’ orders to continue with execution of their plans.
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