Executives of National Insurance Commission with shareholders at the event.
*Clears 44 firms to proceed with recapitalisation plans
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Chuks Udo Okonta
The National Insurance Commission (NAICOM) has said funds raised from investors in the ongoing recapitalisation would be refunded if the companies failed to recapitalised.
The Director, Policy & Regulation Directorate, NAICOM, Pius Agboola, who is also Chairman, Insurance industry Recapitalisation Committee, said this today at the interactive session with shareholders association of quoted insurance companies in Lagos. He noted that all funds raised in the recapitalisation would be paid into an escrow account domiciled in the Central Bank of Nigeria (CBN), stressing that funds from companies that failed to recapitalised would be returned to investors from who the companies raised the funds.
Agboola also posited that the commission would ensure thorough oversight on how successful companies would invest the funds raised in the recapitalisation.
He noted that 44 underwriting firms have received regulatory approval to continue with implementation of their recapitalisation plans.
NAICOM has reviewed the plans of six companies but was not satisfied with their reports and has asked them to make amend and re-submit their plans.
He noted that two insurers plans are currently undergoing review while two insurers are yet to submit their plans at all, a development he attributed to perculiar situation the erring companies are currently undergoing.
He, however, advised public shareholders present at the meeting to acquire more Insurance stocks in the ongoing exercise so that they can influence decisions in their respective companies.
Shotunde Shopeju and a shareholder at the event.
While stating that 80 per cent of underwriting firms want to recapitalise through IPO and Rights Issue, he added that only few insurers are considering mergers and acquisition in an effort to scale through the hurdle.
The recapitalisation exercise, according to him, was meant to increase the risk capacity of local insurers so that they can retain more risks in the local market, thereby, increasing the contribution of Insurance industry to the nation’s economy.
Agboola informed the shareholders that the exercise would allow investors get values and good returns on their investments.
NAICOM had earlier ordered insurance companies with composite license to upgrade their capital base from N5 billion to N18 billion to continue to underwrite life and non-life insurance businesses in the country.
Head of Department Financial Guidance and Corporate Governance, Security Exchange Commission (SEC) implore shareholders to take advantage of the recapitalisation buy shares of insurance companies now that the share prices are low, stressing that SEC would ensure that the interest of shareholders are protected in the recapitalisation.
Shareholders such as, Shotunde Shopeju; Oyegunle Olayitan and Nona Awo, commended NAICOM for organising the event and implored the insurance regulator to regularly consult shareholders before initiating programmes that affect their companies. Some of them however, complained that the time given for the exercise is too short.
Responding, Agboola said, the commission will articulate their complaint, review it, and if the situation warrants extension, the regulator will surely do so.
Life insurance firms were required to increase their minimum capital requirement from N2 billion to N8 billion, amounting to 400 per cent increase in their capitalisation.
Similarly, General insurance companies are to raise their capital base to N10 billion from N3 billion to continue to exist in insurance industry, even as Reinsurance Firms will now need N20 billion capital base to operate Reinsurance business in the country, unlike N10billion they were operating with, prior to now.