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Chuks Udo Okonta
The National Insurance Commission (NAICOM) hopes to implement the law against insurance firms that failed to meet statutory capital base, Inspen can report.
It was gathered that the outcome of the proposed capital verification which is billed for the first quarter of 2017, would be treated according to stipulated laws.
A source told Inspenonline that firms that failed to meet the required capital base will face the consequences. The sourced added that the verification would also enable the commission to pool data for implementation of Risk-Based Supervision (RBS).
In the requirements for registration of insurance and reinsurance companies, NAICOM stated that Life Insurance Company Must have a minimum of N2 billion share capital duly registered by the Corporate Affairs Commission (CAC). Non-Life, Must have N3billion, Composite N5 billion and Reinsurance N10 billion.
The decision to verify the capital resources of all Insurance Companies, has raised tension in the industry as many believed that the Commissioner for Insurance Mohammed Kari, who does not bend the rules as seen in the case of insurance brokers with lapsed licences, would ensure the weight of the law is dropped on firms that failed to scale through the verification huddles.
According to NAICOM, since the last recapitalisation exercise in 2007, the business environments and the risk profile of all Insurance Institutions have changed and to ensure protection of policyholders and beneficiaries of insurance contracts against unexpected losses of Insurance Companies, it hopes to verify Assets and Liabilities of all insurance Companies.
The commission had enjoined boards of insurance firms to ensure fairness in valuation of assets and liabilities of their Companies when presenting the Financial Statements for the year ending 31 December, 2016.
It also urged all Professionals that participate in the financial reporting supply chain to ensure their duties in the valuation of assets and liabilities and issuance of opinion on financial reports are discharged creditably in accordance with relevant laws and professional standards.
Checks by Inspenonline revealed that the shareholders’ funds of seven firms are presently below statutory capital requirement, whilst those of 10 others, are slightly above required capital base.
In the last insurance industry recapitalisation, Non Life insurance firms were mandated to raised their shareholders’ fund to N3 billion; Life Insurance operators, N2 billion, Composite N5 billion and Reinsurance N10 billion.
According to the 2014 Insurance Digest, published by the Nigerian Insurers Association (NIA), the shareholders’ funds of Standard Alliance Life Company Limited stood at N720.92 million as against the statutory N2 billion; International Energy Insurance Plc, has -N1.5 billion, as against N3 billion; Goldlink Insurance Plc, -N3.90 billion.
Others with negative funds are, Investment & Allied Insurance Plc, -N955.26 million and SpringLife Assurance Plc, -N351.12 million.
Firms with funds slightly above required capital include, Sterling Assurance Nigeria Limited, N3.1 billion; Staco Insurance Plc, N3.17 billion; Equity Assurance Plc, N3.43 billion and Capital Express Assurance Limited, N2.06 billion.