The National Insurance Commission (NAICOM) has approved the recapitalisation work plans of 26 insurance companies trying to raise more funds in their bids to meet its June 2020 deadline for players in the sector to shore up their capital.
Announcing the result of its review of the work plans, the commission said out of a total of 57 insurance firms and two reinsurance firms in the country, 47 insurance firms and two reinsurance firms submitted their plans.
NAICOM in a circular titled 'Update on recapitalisation of insurers and reinsurers, firms,' released yesterday, said out of the 57 insurance firms, 26 insurance firms got it right and could go ahead with their recapitalisation plans.
However, 17 insurance firms with defective work plans were corrected and advised to resubmit new plans using paid-up capital and not shareholders' funds in recapitalising.
Four insurance firms did not have the requisite 2018 financial statements and were advised to review their plans of using initial public offer (IPO) to raise funds.
One insurance firm, however, has litigation issues and has been advised to resolve them as soon as possible to enable it to progress in the exercise; while one company's submission was noted to have met the necessary requirements.
NAICOM added that two companies' submissions are currently undergoing review, while three firms are yet to submit their recapitalisation plans.
Another three companies are under receivership, while the two reinsurance companies have submitted their reports which are also under review.
Speaking on behalf of the Acting Commissioner for Insurance, Mr. Sunday Thomas, NAICOM's Head Commissioner for Insurance Directorate, Rasaaq Salami, said in keeping with the recapitalisation roadmap, the commission had concluded the review of the submissions and had communicated individual companies on their positions.
He stressed that NAICOM's resolve to adhere to the recapitalisation roadmap towards achieving its desired objectives in the best interest of all stakeholders
"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 recapitalisation plans by August 20, 2019, the commission hereby notifies all insurance stakeholders that it received plans of 47 insurers and two reinsurers," he added.
NAICOM had in May announced a new capital regime in form of increase in paid-up share capital of insurance firms.
The commission had raised the minimum paid-up capital of the insurance companies by 400 per cent and gave June 30, 2020 as new recapitalisation deadline for all insurance companies in Nigeria as part of the commission's renewed efforts at strengthening the financial muscle of the insurance sector and enhancing its competitiveness.
Effective from the aforementioned date, the minimum paid-up share capital for each insurance company operating under the following classification increased as follows: Life Insurance companies N2 billion to N8 billion; general business insurance companies, N3 billion to N10 billion; composite business insurance companies, N5 billion to N18 billion; and reinsurance companies, N10 billion to N20 billion.
However, the commission had stated that the effective date for new applicants took effect from the commencement date of the circular, which was May 20, 2019 while it excluded Takaful operators and micro-insurance companies from the new recapitalisation requirements.