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Chuks Udo Okonta
Many insurance firms need to urgently embrace consolidation and recapitalisation to remain afloat as their shareholders’ funds have dropped below statutory requirement, Inspen can report.
Investigation 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; Unic Insurance Plc, N2.70 billion 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.
Commissioner for Insurance Mohammed Kari, said consolidation is inevitable in the industry, adding that there are many players in the industry who do not add value to the services they provide.
He noted that in the proposed Risk-Based Supervision (RBS), the capital requirements of firms would be reviewed, stressing that firms which funds fall below requirement, would require additional capital to meet minimum requirement.