- NAICON building
The National Insurance Commission (NAICOM) has approved licenses for 26 insurance companies to proceed with their respective recapitalization plan.
A statement by the NAICOM Head, Commissioner for Insurance Directorate, Rasaaq Salami in Abuja, said in keeping with the recapitalization roadmap, the Commission has concluded review of the submissions and have communicated individual companies on their positions.
NAICOM had directed insurance and reinsurance companies to submit their recapitalization plans by August 20, 2019. Till date the Commission said it received received plans of Forty-Seven (47) insurers and two (2) reinsurers.
Full text of the statement reads: “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.
“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:
* twenty six (26) companies have been granted “No Objection ” to proceed with their plans;
* the plans of 17 companies were corrected and have been advised to resubmit their new plans using paid-up capital and not shareholders fund;
* four (4) companies do not have the requisite 2018 financial statements and are thus, advised to review their plans of using IPO;
* One (1) company has litigation issues and has been advised to resolve them as soon as possible to enable its progress;
* One (1) 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.
The National Insurance Commission (NAICOM) is resolved to adhere to the recapitalization roadmap towards achieving its desired objectives in the best interest of all stakeholders”.
It would be recalled that National Insurance Commission (NAICOM) on Monday, set June 30, 2020 as new recapitalization deadline for all exiting insurance companies in Nigeria as part of the Commission’s renewed efforts at strengthening the financial muscle of Nigeria’s insurance sector and enhance its competitiveness.
Effective from that date, the minimum paid-up share capital for each existing 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 stated that the effective date for new applicants take 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 recapitalization requirements.
NAICOM disclosed this in its circular referenced NAICOM/DPR/ CIR/25/2019 and dated May 20, 2019, addressed to all insurance and reinsurance companies.
The circular signed by the Commission’s Director, Policy and Regulation Directorate, Pius Agboola, was entitled “Minimum Paid-Up Share Capital Policy for Insurance and Reinsurance Companies In Nigeria.”
According to the circular, “In 2005/2007, insurance industry witnessed its last recapitalisation and despite the astronomical increase in value of insured assets, consequent exposure to higher level of insured liabilities and operating cost of insurers, the same capital continued to rule in the insurance industry.
“The provision in respect of requirement of statutory deposit as stipulated in Part III, Section 10 of the Insurance Act 2003 shall apply for effective date of commencement of this circular. All insurance and reinsurance companies are required to ensure strict compliance with this circular. The commencement date of this circular shall be May 20, 2019.”
Recall that NAICOM had in July 2018 announced that the Tier Based Minimum Solvency Capital (TBMSC) to take off on January 1, 2019. But the TBMSC which was intended to restrict each insurance company operations to areas of its financial capacity was resisted by operators and this culminated to its cancellation in October, 2018 by the Commission.