Insurance

Standard Alliance Life, ARM Life others shareholders’ funds plummet

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Chuks Udo Okonta

Thirteen insurance companies urgently need to raise their shareholders’ funds to remain afloat, Inspen Can report.

The most affected firms according to the Nigerian Insurers Association (NIA) in its 2015 Nigeria Insurance Digest are: Standard Alliance Life Company Limited, which had N827,06 million as against the statutory N2 billion; ARM Life Plc, had N1.74 billion; Goldlink Insurance Plc, N-3.90 billion; International Energy Insurance Plc, N-2.12 billion; Investment and Allied Insurance Plc, N-955.25 million; Guinea Insurance Plc, N2.89 billion and SpringLife Assurance Plc, N-351.12 million.

Companies that are slightly operating above the required fund include: Staco Insurance Plc, N3.40 billion; UNIC Insurance Plc, N2.70 billion; Wapic Life assurance Limited, N2.55 billion; Royal Exchange Prudential Life Plc, N2.31 billion; Capital Express Assurance Limited, N2.07 billion and Alliance & General Life Assurance Plc, N2.74 billion.

Leadway Assurance Limited led the firms with sufficient funds with N20.03 billion, followed by NICON Insurance Plc, N16.59 billion and Linkage Assurance Plc, N15.59 billion.

According to the NIA, underwriters shareholders’ funds stood at N343.62 billion and Reinsurance firms have N33.16 billion in 2015.

The National Insurance Commission (NAICOM) has pledged to implement the law against insurance firms that failed to meet statutory capital base.

It was gathered that the outcome of the proposed capital verification which is presently being worked on, 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).

The decision to verify the capital resources of all Insurance Companies, has raised tension in the industry as many believed 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.

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.

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