- NAICOM Okays Recapitalisation Plans Of 44 Insurance Companies
The National Insurance Commission (NAICOM) has approved the recapitalisation plan of 44 Insurance companies in Nigeria.
This was disclosed on Tuesday by NAICOM’s Director, Policy and Regulation, Agboola Pius during an interactive session with shareholders to update them on the 2019 recapitalisation directive, in Lagos.
With the number (44) that got NAICOM’s approval, there are still 10 insurance companies left.
Giving an update on the remaining 10, Pius said the commission rejected the recapitalisation plans of six insurance companies and directed them to make amendments.
Speaking further, he noted that the plans of two companies were under review, while the two other companies have not submitted any plans to the commission.
He said NAICOM saw the need for the recapitalisation to increase the retention capacity and conservation of foreign exchange earning of the insurance companies.
“The retention capacity is the maximum amount of risk retained by an Insurer per cover and the capital size of an underwriter.
“When the insurance companies are well solidified, they can retain most of the risk in the country,” he said.
He further disclosed that the commission has reeled out guidelines on the capital restructuring of the insurance firms; the option the firms choose to finance their assets and investment, except borrowing.
Pius listed the options as Initial Public Offering (IPO), Right issues, capitalisation of retained earnings and other means such as private placement, merger or acquisition.
He also disclosed that the commission has developed an appropriate framework to ensure that their investments were secured during the exercise.
The measures, according to him, include a directive to the insurance companies to deposit the recapitalisation fund in the Central Bank of Nigeria (CBN) Escrow account, which cannot be withdrawn without NAICOM directive after a time frame.
He highlighted the benefits of the recapitalisation as; High-Value Creation to limit borrowing, enabling of better strategic planning and reduction in cost of capital with proper oversight.
Pius added that it would also result to an increase in liquidity and Investment funds, Hedge Against Risk arising from Macro-Economic environment, among others.
