Earlier thinking in some quarters, that the National Insurance Commission (NAICOM) was going to extend the recapitalisation deadline beyond 30th June 2020, or that it was going to reduce the level of capital requirement for different insurers may have probably ended with current developments today.
This is coming on the heels of different levels of consultations by the industry trade groups to the regulator, which though was successful, but failed to change the key issues – timing and amount of capital.
Again, NAICOM has substantiated this assumption with its statement penultimate week that it has resolved to adhere to the recapitalization roadmap towards achieving its desired objectives in the best interest of all stakeholders.
What that means is that NAICOM has asked individual companies to go ahead and meet the new minimum requirement as directed following the review of their recapitalisation plans.
According to NAICOM, out of the 57 registered insurance companies and two reinsurers, one insurance company has met the recapitalisation requirement.
According to the Commission, 47 insurers submitted their recapitalization plans and have all been directed what to do.
In a statement tittled ‘Update on Recapitalization of Insurers and Reinsurers’ signed by Rasaq Salami, head, Commissioner for Insurance Directorate , the Commission said, further to the circular issued by NAICOM on May 20, 2019 increasing the paid up share capital of Insurers and reinsurers in Nigeria and, the subsequent directives to companies to submit their recapitalization plans by August 20, 2019 the Commission hereby notifies all insurance stakeholders that it received plans of Forty-Seven (47) insurers and two (2) reinsurers.”
He said in keeping with the recapitalization roadmap, the Commission has concluded review of the submissions and have communicated individual companies on their positions as detailed below:”
Salami said twenty six (26) companies have been granted “No Objection ” to proceed with their plans, while the plans of 17 companies were corrected and have been advised to resubmit their new plans using paid-up capital and not shareholders fund;.
According to the stamen, four (4) companies do not have the requisite 2018 financial statements and are thus, advised to review their plans of using IPO.
The statement also noted that one company has litigation issues and has been advised to resolve them as soon as possible to enable its progress, while one company’s submission was noted to have met the necessary requirements.
“The review of submissions from two (2) companies is ongoing while, three (3) companies are yet to submit their recapitalization plans.”
NAICOM had in a circular dated July 23rd, 2019, sent to the all insurance and reinsurance firms titled: “Re: Minimum Paid Up Share Capital Policy for Insurance and Reinsurance Companies,” signed by Pius Agboola, director, Policy & Regulation Directorate, NAICOM 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.”
The commission noted that after the submission is made, it “shall review and provide response on the submitted plans on or before September 17, 2019,” adding that the review may require meeting the board and management of each of the insurance companies on its recapitalisation plan.
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.
Modestus Anaesoronye
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