Foreign insurance companies operating in Nigeria are pouring in more capital through their local subsidiaries amid the ongoing recapitalisation of the industry, in what leaders of the firms say is a sign of their confidence in the insurance sector of Africa’s most populous nation.
Over the last one week, two of the biggest foreign-owned insurance companies, Old Mutual and Allianz, announced full recapitalisation of their operations in line with earlier demand by the National Insurance Commission (NAICOM) for companies to shore up their paid-up share capital.
Old Mutual’s Life and General Businesses have achieved these minimum requirements ahead of the timeline, reflecting the company’s commitment to the insurance industry in Nigeria, according to Samuel Ogbu, the group CEO of Old Mutual West Africa.
“Having been in Nigeria for some years, Old Mutual is committed to playing an active, leading role in a revitalised Nigerian insurance industry,”Ogbu says.
According to Ogbu, the company is reshaping its business to truly reflect her brand in a market whose immense potential is still to be realised. “We believe we have an important part to play in bringing better value and an enhanced experience to the Nigerian insurance and financial services consumer,” he states.
Adeolu Adewumi-Zer, CEO, Allianz Nigeria, says with an additional capital injection of N9.15 billion from our shareholder, Allianz Africa Holding GmBH (a legal entity of Allianz Africa), our capital base now is above the N18 billion requirement.
The company is in the process of completing all regulatory procedures for recognition of the capital inflow, as additional shares are to be issued and allotted to all shareholders, according to Adewumi-Zer.
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She states that Allianz is renowned globally for absolute compliance with regulatory guidelines, and “In order to err on the side of caution and with the full support of our parent group, we successfully imported our capital ahead of the stipulated deadline.”
Olusegun Omosehin, managing director, Life Assurance, Old Mutual Nigeria, notes, “We are excited about the next decade of growth and innovation in Nigeria because we believe in the prospect of the insurance sector, especially with the various reforms and imminent introduction of the micro-insurance market through technology.”
Abimbola Alabi, chief operating officer, Allianz Nigeria, on the other hand, says the capital injected will be employed in expanding the retail segment of the business to position the company for the explosive retail growth already being experienced in the market.
The recapitalisation exercise is coming amid a challenging business environment that has proven tough, particularly for the insurance industry, which is trying to increase penetration in a country where less than 1 percent of the population is insured.
Meanwhile, other local insurers and those with foreign interest are at different levels of the exercise, gearing up to meet their capital.
At the last count, over 70 percent have completed their first phases of the recapitalisation project despite court order halting the exercise, though a top few are not bothered about the new requirement having met the requirement before now.
The NAICOM of Nigeria in 2019 directed insurance and reinsurance companies operating in the country to increase their minimum capital base.
For life and general insurance companies, they were directed to increase from N2 billion and N3 billion to N8 billion and N10 billion, respectively, while composite insurance companies and reinsurance companies were directed to increase theirs from N5 billion and N10 billion to N18 billion and N20 billion, respectively.
NAICOM however mandated insurers to fully comply by September 30, 2021, before it was put on hold following a court order instituted against the Commission by some group of shareholders.
