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Recapitalisation : Shareholders Laud NAICOM’s Cancellation

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insurance
  • Recapitalisation: Shareholders Laud NAICOM’s Cancellation

Shareholders on Monday commended the National Insurance Commission (NAICOM) over the cancellation of the Tier Based Solvency Capital recapitalisation.

The shareholders under the aegis of the Independent Shareholders Association of Nigeria (ISAN) said the cancellation of the recapitalisation bid by NAICOM was a welcome development and a sign of respect for the rule of law.

Mr Moses Igbrude, ISAN Publicity Secretary, told the News Agency of Nigeria (NAN) in Lagos that it was a welcome development that the regulator toed the path of law.

NAN reports that NAICOM on Nov. 23 announced the cancellation of the Tier Based Solvency Capital policy for the underwriting sector with immediate effect.

The commission gave this notice in a circular to all insurance companies on ‘Withdrawal of circular on Tier Based Solvency Capital policy for insurance companies in Nigeria,’ signed by the Director, NAICOM, Mr Agboola Pius, on Friday.

It will be recalled that recently, NAICOM announced a raise in the minimum capital base for life, non-life and composite insurance companies seeking licences to underwrite all risks in Nigeria.

The companies required from N2 billion, N3 billion and N5 billion to N6 billion, N9 billion and N15 billon, respectively under the tier-based minimum solvency capital structure.

It later announced an Oct. 1, 2018 deadline, which was not accepted by stakeholders, pushing them to take a legal action against the commission.

Igbrude said the shareholders were not against insurance recapitalisation but rather not comfortable with the short period of time NAICOM gave them for the exercise.

He said the shareholders were worried by the way and manner NAICOM changed the recapitalisation deadline from January 2019 to October 2018.

“The way they suddenly brought the day backward from January 2019 to October 2018 raised our suspicious to whether some cabal in the sector wants to corner insurance business through such a sudden and drastic action,” Igbrude said.

He said shareholders appreciated NAICOM’s efforts and eagerness to strengthen the operators’ capital base.

Igbrude urged the regulator to carry all stakeholders along through proper engagement and enlightenment to ensure mutual understanding for the benefit of the industry in particular and the economy in general.

“I sincerely advise the insurance companies to make hay while the sun shines because this opportunity will not last so long.

“All the insurance companies concerned should do their best to recapitalise as soon as possible to various categories they want to operate within the sector,” Igbrude stated.

However, Mr Sola Oni, a chartered stockbroker and Chief Executive Officer, Sofunix Investment and Communications, said illiquidity nurtured by customers’ apathy had made life difficult for insurance companies.

Oni said multinational companies in the oil and gas prefered offshore underwriters to carry their risk as against local ones who were defaulting steadily in settlement of claims and finding it difficult to mobilise premium.

“The court action which prompted NAICOM to suspend its tier-based solvency policy shall eventually be on the front burner.

“There is no quick fix that can provide financial succor for our ailing insurance firms outside the wall of outright recapitalisation or through mergers and acquisition in the final analysis.

“The earlier they accept the hard reality, the better,” Oni said.

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

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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