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NAICOM Raises Insurance Firms’ Capital Base to N15bn

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5 years ago

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Insurance - Investors King
  • NAICOM Raises Insurance Firms’ Capital Base to N15bn

The National Insurance Commission has raised the minimum capital base for composite insurance companies (life and non-life underwriters) that want to get licences to underwrite all risks in the country from N5bn to N15bn.

The risk-based solvency implementation team of the commission disclosed this during a presentation on ‘Recapitalisation of insurance companies: The tier-based minimum solvency capital’ in Lagos on Wednesday.

NAICOM also raised the minimum capital requirement of life insurance companies that want to underwrite all forms of life insurance from N2bn to N6bn; while the minimum capital base for non-life insurance companies was raised from N3bn to N9bn.

The commission, however, explained that insurance companies operating with the old capital requirements would not be forced to recapitalise but would be restricted to underwrite only certain business.

“There will be no mandatory injection of fresh capital funds by insurers; no cancellation of licence of any operator is anticipated, but subject to solvency control levels,” it stated.

It also noted that the review of the capital base did not extend to reinsurance companies.

“The tier-based minimum solvency capital structure is a complimentary measure to the ongoing implementation of the risk-based supervision programme,” NAICOM stated.

The commission specified the minimum capital of N2bn, N3bn and N6bn respectively for Tier 3, Tier 2 and Tier 1 life insurance companies, while non-life insurance firms’ minimum capital was fixed at N3bn, N4.5bn and N9bn for Tier 3, Tier 2 and Tier 1, respectively.

NAICOM stated that the new capital base would take effect from January 2019. In the new era, life insurance companies under Tier 3 will only be licensed to underwrite individual life, health and miscellaneous insurance; while the non-life under this category will be licensed to underwrite fire, motor, general accident, engineering (only classes covered by compulsory insurance), agriculture and miscellaneous insurance.

NAICOM stated that life insurance companies under Tier 2 would be licensed to underwrite all Tier 3 risks and group life assurance; while the non-life firms in this category would be allowed to underwrite all Tier 3 risks and engineering (all inclusive), marine, bonds credit guarantee and suretyship insurance.

Under the new dispensation, life insurance companies under Tier 1 will be allowed to underwrite all Tier 2 risks and annuity; while the non-life firms in this category will be allowed to underwrite all Tier 2 risks and oil and gas (oil related projects, exploration and production), and aviation insurance.

According to the commission, the TBMSC introduces a proportionate capital that supports the nature, scale and complexity of the business conducted by insurers, and is a three-level model that specifies the capital requirement for each tier based on risk classification for each tier.

The commission said it would open up the licensing window to interested investors at higher tier levels.

According to NAICOM, the industry unanimously agreed for a desirable recapitalisation at the Insurers’ Committee retreat in February in Abeokuta.

The last regulatory recapitalisation of insurance companies was carried out in February 2007.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Merger and Acquisition

Oppenheimer Acquires Full Control of Nigeria’s GZ Industries in Bet on Economic Revival

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2 days ago

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December 1, 2023

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GZ Industries Limited

Jonathan Oppenheimer, scion of South African billionaire Nicky Oppenheimer, has secured full ownership of Nigeria’s largest beverage can manufacturer, GZ Industries Ltd.

Oppenheimer Partners Ltd. concluded the acquisition of the remaining shares from Affirma Capital, formerly known as Standard Chartered Private Equity.

While financial details were not disclosed, the private equity firm previously held a 37.5% stake in GZ Industries, a major supplier of cans to global brands such as Coca-Cola.

The move positions Jonathan Oppenheimer to play a pivotal role in shaping GZI’s growth trajectory in sub-Saharan Africa.

With urban, educated adults in the region leading global sugary drink consumption with 12.4 servings per week, GZI’s strategic importance in meeting this demand is underscored.

Oppenheimer Partners initially invested in GZI in 2018, coinciding with the establishment of a factory in South Africa, where the company now commands a 20% market share.

GZI, a producer of 3 billion aluminum cans annually in Africa, competes with Nampak Ltd., which is currently undergoing restructuring efforts.

Affirma Capital’s exit from GZI aligns with its broader investment strategy in Africa, having invested in 11 companies since 2008, with eight successful exits returning over $800 million to investors.

Jonathan Oppenheimer, part of the wealthy Oppenheimer family, inherits a substantial role in GZ Industries, further diversifying the family’s portfolio, which amassed significant wealth through the 2012 sale of their stake in De Beers for about $5 billion.

The family’s combined net worth is estimated at $9.4 billion, according to the Bloomberg Billionaires Index.

As Nigeria’s President Bola Tinubu outlines ambitious spending plans for 2024, the acquisition positions GZI strategically in a potentially thriving economic landscape.

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Merger and Acquisition

Equinor Concludes Sale of Stake in Chevron’s Agbami Oil Field to Chappal Energies

Published

3 days ago

on

November 30, 2023

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Chevron

Norwegian energy company Equinor has successfully finalized the sale of its 20.21 per cent stake in Chevron’s Agbami oil field.

The transaction, including Equinor’s 53.85 per cent ownership in Oil Mining License 128, was completed with Nigerian-owned Chappal Energies. The financial details of the deal have not been disclosed.

Equinor, a longstanding player in Nigeria’s energy sector since 1992, views this divestment as a strategic move in line with its broader international oil and gas portfolio optimization strategy.

Nina Koch, Equinor’s Senior Vice President for Africa Operations, commented on the transaction, stating, “This transaction realizes value and is in line with Equinor’s strategy to optimize its international oil and gas portfolio and focus on core areas.”

Chappal Energies, the acquiring entity, is a committed Nigerian-owned energy company with ambitions to further develop the assets, contributing significantly to the Nigerian economy.

The completion of the transaction remains contingent on various conditions, including regulatory and contractual approvals.

Equinor’s exit from the Agbami oil field signifies a shift in its global asset portfolio management, enabling the company to concentrate on its core operational areas.

The deal aligns with the broader industry dynamics and demonstrates Equinor’s commitment to strategic alignment and operational efficiency.

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Company News

Dangote Petroleum Refinery Set to Make History with Public Listing on NGX

Published

5 days ago

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November 28, 2023

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Dangote refinery

Aliko Dangote, the president and chief executive of Dangote Industries Limited, has announced plans to publicly list the subsidiary, Dangote Petroleum Refinery, on the Nigerian Exchange Limited (NGX).

Dangote expressed confidence in overcoming previous challenges related to crude oil supply, stating, “We have resolved all the issues with crude oil supply. We are now ready to move forward with our plans to list the refinery on the Nigerian Exchange Limited.”

The refinery, poised to commence operations in December, holds the promise of significant contributions to the Nigerian economy.

At full capacity, it is expected to produce 650,000 barrels of oil per day, with an initial rollout of 540,000 barrels daily.

The facility will produce 27 million liters of diesel, 11 million liters of kerosene, and nine million liters of jet fuel, sourcing crude from various Nigerian producers, including the state oil company.

A finalized deal for the delivery of the first cargo of approximately six million barrels next month signals the imminent realization of this ambitious project.

The refinery’s impact is anticipated to extend beyond the oil and gas sector, with projections suggesting significant cost savings for Nigeria by eliminating the need to import petrol.

Industry operators and government officials are optimistic about the transformative potential of the Dangote Refinery.

Akinwumi Adesina, President of the African Development Bank (AfDB), lauded the project as the best-industrialized initiative for Africa, projecting substantial savings for Nigeria and the continent as a whole.

As Nigeria’s largest refinery project, the facility has garnered praise from the Lagos Chamber of Commerce and Industry (LCCI).

Dr. Chinyere Almona, the LCCI Director-General, commended the visionary efforts of Aliko Dangote and the supportive federal government, emphasizing the refinery’s capacity to meet Nigeria’s refined petroleum product needs.

The impending listing on the NGX positions Dangote Petroleum Refinery as a catalyst for economic growth, energy security, and self-sufficiency in Nigeria and beyond.

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