Insurers race against clock as capital audit drags days to deadline

With barely a week left till the July 31 recapitalisation deadline, Nigeria’s insurance sector has entered its final stretch. Underwriters and operators are working round the clock to clear final capital verifications, secure regulatory approvals, and close last-minute funding rounds required to meet the laid-down capital thresholds.

This phase of the exercise has exposed a sharp divide across the market. While a significant cohort of operators has comfortably secured and verified their expanded capital base, others are waiting for regulators to validate their newly injected funds. Moreso, the deadline sets the stage for a potential industry shakeup in the coming months, with undercapitalised firms bracing for mergers, acquisitions, or direct regulatory intervention.

Industry sources estimate that insurers have collectively raised close to N300 billion since the recapitalisation programme commenced, while capital verification has been completed for about 50 of the industry’s 58 insurance companies, reflecting strong investor appetite for the sector despite Nigeria’s challenging macroeconomic environment.

A senior official at the Nigerian Insurers Association (NIA), who requested anonymity, said, “I am aware that many of the insurance companies have met the capital requirement and will be announced once the deadline expires.”

The executive added that a few other insurers are pursuing internal measures, which they have kept under wraps, but noted that the regulator would have the final say.

Asked whether the deadline could be extended because capital verification remains ongoing, the official said: “I can’t say. Only NAICOM can confirm that.”

Industry sources also said NAICOM has intensified the verification exercise by deploying internal finance and risk management officials to support the Big Four audit firms conducting independent capital verification, as several operators seek to beat the regulatory deadline.

“I am aware that some NAICOM officials are in Lagos supporting the verification of capital raised by companies that submitted late, given the very limited time left before the deadline,” one source familiar with the exercise said.

The recapitalisation exercise followed the signing of the Nigerian Insurance Industry Reform Act (NIIRA) by President Bola Tinubu on August 5, 2025. The legislation significantly increased minimum capital requirements to strengthen insurers’ financial capacity, improve claims-paying ability and prepare the industry for a transition to a Risk-Based Capital (RBC) regime.

Under the new law, life insurance companies are required to maintain a minimum capital of N10 billion, general insurers N15 billion, composite insurers N25 billion, while reinsurers must have N35 billion.

Although NAICOM has not officially commented on the outcome of the exercise, Olusegun Omosehin, Commissioner for Insurance/CEO, indicated in a private conversation with BusinessDay that the commission was encouraged by the level of investor response. According to him, several insurers raised more capital than initially projected, reflecting growing confidence in the industry’s long-term prospects.

Since the reforms took effect, insurers have embarked on one of the largest capital-raising exercises in the sector’s history, relying mainly on rights issues and private placements.

Babatunde Fajemirokun, managing director/CEO of AIICO Insurance Plc, said investors increasingly recognise the sector’s long-term growth potential despite comparisons with banking stocks.

“I would be careful with any straight comparison because the two sectors are at different stages of their development cycles,” he said.

According to him, the NGX Insurance Index returned about 65.6 percent in 2025, outperforming the banking index’s 39.8 percent, although much of the insurance sector’s performance came from a relatively low base and many insurance stocks remain thinly traded.

“Banking offers scale, liquidity and established dividend flows, while insurance offers a longer-term structural growth story. Fresh investment in insurance is a sound medium- to long-term decision, particularly in well-capitalised and well-governed companies with clear growth strategies.”

Fajemirokun said the true value of recapitalisation would ultimately be measured by improved service delivery rather than stronger balance sheets.

“The real prize is not the headline capital figure but what stronger insurers can now do for policyholders. A recapitalised industry should mean faster claims settlement, greater capacity to retain large risks locally and wider access to insurance for retail customers, microinsurance clients and the informal sector.”

NAICOM appointed the Big Four global audit firms to independently verify insurers’ capital positions before confirming compliance. The process requires companies not only to raise the required funds but also to demonstrate that the capital has been fully paid, independently verified and meets regulatory standards.

Industry analysts say the verification process has effectively shortened the compliance timeline because fundraising must be completed early enough for auditors to finish their reviews before the deadline.

Among the companies that have raised fresh capital are Linkage Assurance Plc, which raised N16.3 billion; Sovereign Trust Insurance Plc, which completed a N5.02 billion rights issue; SUNU Assurances Nigeria Plc, which raised N9.3 billion; Coronation Insurance Plc, which secured N9.26 billion through private placement; Universal Insurance Plc, which raised N15 billion through a combination of rights issue, public offer and private placement; and Veritas Kapital Assurance Plc, which raised N17.5 billion.

With four days remaining, attention is now firmly on NAICOM’s final verification process, which will determine which insurers emerge fully recapitalised and which may have to pursue mergers, other regulatory options after July 31.