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NAICOM to ring-fence recapitalisation fund to protect investors

Investors in the ongoing recapitalisation exercise in the insurance industry have been assured that their investment would be protected to ensure that companies use them for what it was meant.

Industry regulator, the National Insurance Commission (NAICOM) gave the assurance during an interactive session with shareholder groups on the ongoing recapitalization in the insurance industry.

Sunday Thomas, acting commissioner for Insurance/CEO NAICOM who dropped the hint during question and answer section noted that beyond directing the insurers to deposit any capital injected in the course of this recapitalisation into an Escrow Account with the Central Bank of Nigeria (CBN) until when it will be approved for use, it will also ring-fence the funds thereafter to monitor what it will be used for.

Pius Agbola, director, Policy and Regulation Directorate in NAICOM who represented Thomas said this is in view of it experience with the past recapitalisation exercises, where funds where directed to wrong uses.

We are prepared to protect investors who put their money in insurance business, Thomas said.

According to him NAICOM had given options on how insurance companies can raise the money, saying “Insurance companies can raise the money through Initial Public Offering (IPO), right issues, capitalisation of retained earnings and other means such as private placement, merger or acquisition.”

He however condemned borrowing adding that, “If any company wants to go for merger and acquisition or IPO, it must give date because all options have time frame.”

According to him, NAICOM has approved the recapitalization plans of 44 companies, rejected that of six insurance companies of which they have been directed to make amendments, two companies are under review, while two companies have not submitted any plans at all to the Commission.

With an estimated N200 billion expected into the Nigerian insurance industry after the ongoing recapitalisation by underwriters, the sector is hopeful to emerge stronger, contribute reasonably to the economy and also able to offer good returns to investors.

Industry experts believe that the sector post consolidation will have enough resources to attract quality manpower, acquire necessary skills to underwrite big ticket risks, increase retention in the local market, and be able to take advantage of untapped potentials to create shareholder value.

The National Insurance Commission (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, with 30th June 2020 as deadline.

Modestus Anaesoronye


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