AIICO insurance responds to new rules, plans N25bn capital raise

Underwriting firm, AIICO Insurance Plc has announced plans to raise additional N25 billion through private placement, to enable it play in higher tier capital level in the nation’s insurance industry.
The insurer through a notice to the Nigerian Stock Exchange on Friday informed the country’s bourse of a proposed Extra Ordinary General Meeting (EGM) for October 5, 2018, where it will seek the approval of its shareholders to raise fresh funds.
AIICO is raising additional capital through the issuance of up to 4,400,000,000 ordinary shares at 0.50 kobo each at N1.20 kobo per share by way of special / private placement.
As at the end of 2017 financial year, AIICO Insurance Plc (the group) had total assets of N92.4 billion and a shareholders fund of N10.547 billion.
AIICO Insurance Plc, is a leading life insurer in Nigeria. Founded in 1963, AIICO provides life and health insurance, general insurance, investment management and pension management services as a means to create and protect wealth for individuals, families and corporate customers. AIICO has the largest agency workforce in the industry and has branches in 20 states across Nigeria.
The recent announcement by the insurance regulator, the National Insurance Commission (NAICOM) for Tier-level solvency capital has ignited a new challenge among insurance companies in Nigeria, requiring operators to raise additional capital or embark on mergers and acquisition to boost their capital level to be able to play in top tier, where high profile risks are domiciled.
NAICOM in a circular last Monday gave October 1, 2018 as take off-date for the Tier-Based solvency capital requirement for insurance companies.
In the new Tier-Based Minimum Solvency Capital, Tier 3 companies are those that fall within existing paid up capitals of N2 billion for life business; N3 billion for non-life business and N5 billion for composite business.
Companies in this category will be limited to underwrite only risks in life business in the following areas – Individual Life, Health Insurance, Miscellaneous Insurances; while for non-life they will be limited to underwrite risks in these areas – Fire, Motor, General Accident, Engineering (only classes covered by compulsory insurance), Agriculture and Miscellaneous Insurances.
Tier 2 companies are those whose paid up capital has increased by 50 percent above the existing minimum capital.
For life business, their paid up capital will be N3 billion and they are to underwrite all Tier 3 risks and Group Life Assurance (GLA); while for non-life, their paid –up capital base will be N4.5 billion and they will underwrite all Tier 3 risks, Engineering (All inclusive), Marine, Bonds Credit Guarantee and Suretyship Insurances.
Tier 1 companies are those whose paid up capital has increased by 200 percent, above the existing minimum requirement. Life companies in this category will have capital of N6 billion, and will underwrite all Tier 2 risks and Annuity. While for non-life business, the paid up capital will be N9 billion, and will underwrite all Tier 2 risks and Oil & Gas (oil related projects, exploration & production), and Aviation Insurances.
Composite companies in Tier3 will maintain N5 billion; Trier 2 N7.5 billion and Tier 1 will have N15 billion.