Insurers approach shareholders, open discussion with new investor’s on capital requirement

Insurance companies in the bid to meet new capital requirement requested of players in the industry are approaching their shareholders for approvals for capital rising, while others are discussing with dip pocket investors to inject funds.

Across the companies, activities are currently ongoing to accomplish fist line efforts to up capital status before further plans can be made.

Some of the listed companies have written to their shareholders to intimate them of their plans, held Extra Ordinary Meetings (EGM’s) to get shareholders approvals; currently in right issues at the exchange, while some are discussing with local and foreign equity investors.

The Nigerian insurance regulator, NAICOM had in a circular issued on Monday May 20, 2019 announced increase in the paid-up share capital of life companies 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 shall take effect from the commencement date of this circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies shall be required to fully comply not later than 30th June 2020.

Insurance regulator, the National Insurance Commission (NAICOM) is positive that the ongoing recapitalization exercise in the industry will help boost retention capacity.

According to the commission, a lot of the risks emanating from the country were being insured abroad as result of low capacity of insurance in Nigeria.

The Commission had said that the recapitalization exercise will strengthen the operating companies and enhance their capacity to absorb more risks.

“The ongoing recapitalisation exercise will allow local insurers to retain huge risks in the country, thereby, avoiding premium flight, and in the long run increase the profitability of the sector and its impact on the nation’s economic growth and development, insurance commissioner noted.

Sunday Thomas, acting commissioner for Insurance, said the recapitalisation will enable the sector retain insurance businesses instead of ceding them outside the country; turn the image of the market, strengthen financial base of the companies, increase the sector’s contributions to gross domestic product (GDP), and a host of other benefits.

Thomas said: “We have the mandate to ensure that the recapitalisation throws up more solid companies. Our hands are open to welcome old and new investors into the industry.”

He emphasized that NAICOM targets having companies and an insurance sector that will support the government to build a viable economy.

 

Modestus Anaesoronye