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Chuks Udo Okonta
Insurance and reinsurance firms operating in the country in line with the new capital regime announced by the National Insurance Commission (NAICOM) would have to shop for N463 billion to enable them remain afloat.
Data obtained from the Nigerian Insurers Association (NIA) revealed that as at the end of 2017 financial year, the aggregate share capital of the industry stood at N203 billion, whilst the pronouncement by NAICOM, would prop the operators to raise the industry paid-up share capital to N666 billion going by the present number of players in the industry.
A close examination of the industry’s 2017 share capital revealed that non of the 55 underwriting and two reinsurance firms have up to N10 billion share capital, whilst only 10 have shareholders’ fund exceeding N10 billion.
It was also observed that firms with more than N10 billion shareholders’ fund include five composite and five general business, while one life firm has N9.94 billion.
According to experts, NAICOM’s decision to anchor the recapitalisation on paid-up capital would make it difficult for many firms to scale the recapitalisation hurdle.
A top executive of the NIA told Inspenonline that the body would continue to engage the industry regulator to ensure the workability of the new capital regime. The source noted that whilst the engagement runs, the operators also awaits the implementation guidelines to be issued by NAICOM.
The source noted that the operators on individual basis, would engage their shareholders who are expected to inject the fresh funds in the companies.
President, Chartered Insurance Institute of Nigeria (CIIN) Eddie Efekoha, noted that the regulator came up with the exercise because it has the interest of the insurance industry at heart, stating that, operators are already engaging the regulatory body to find a common ground that will benefit all relevant stakeholders in insurance Industry.
NAICOM had on Monday this week announced the increase of minimum paid-up share capital for insurance and reinsurance firms by 300 per cent, thereby making Life Insurance companies to jack-up their capital from N2 billion to N8 billion; general business operators from N3 billion to N10 billion; composite business, N5 billion to N18 billion and reinsurance, N10 billion to N20 billion.