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Insurance Sector’s Assets Hit N1.82tn on Recapitalisation Deadline

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Insurance Sector’s Assets Hit N1.82tn on Recapitalisation Deadline

Despite the impact of COVID-19 pandemic on the economy, the insurance industry attracted some investments that boosted its assets, investigation has shown.

Many of the underwriting firms started sourcing for foreign investors to bring in new capital since the National Insurance Commission ordered the firms to beef up their capital requirements in 2019.

Figures obtained from the Central Bank of Nigeria’s report on ‘Insurance sector (general and life) consolidated balance sheet’ revealed that the industry’s asset rose by N410bn from N1.41tn as of the end of third quarter of 2019 to N1.82tn as of the end of third quarter of 2020.

According to the CBN report, the figure which stood at N1.26tn as of the end of 2018 rose to N1.61tn as of the end of 2019.

The statistics further revealed that the assets rose to N1.52tn, N1.79tn and N1.82tn as of the end of first, second and third quarters of 2020 respectively.

NAICOM had mandated that 50 per cent of the minimum paid-up capital for insurance and 60 per cent for reinsurance must be met by 31 December 2020.

The regulatory body had stated that insurance companies that failed to satisfy the required minimum paid-up capital by December 31, 2020 would be restricted on the scope of business they could transact.

Life and general insurance companies were asked to shore up their existing minimum paid-up capital from N2bn and N3bn to N4bn and N5bn respectively by the end of December 2020, and meet the final minimum paid-up capital requirements of N8bn and N10bn respectively by the end of September 2021.

Composite companies and reinsurance firms were asked to shore up from existing minimum paid-up capital of N5bn and N10bn to N9bn and N12bn by end of December 2020 and to N18bn and N20bn respectively by the end of September 2021.

Some operators had urged NAICOM to waive the first phase of its segmented recapitalisation.

The underwriters also urged NAICOM to consider their challenges by amending some of the requirements in the recapitalisation directive.

The operators said they were more concerned about the aspect relating to attainment of certain thresholds by 31 December 2020, failing which the commission would restrict the scope of business insurance and reinsurance companies would transact.

According to them, the huge impact of COVID-19 on the financial services sector and the national economy at large, coupled with the situation that was worsened by losses from the nationwide #EndSARS protests in the later part of 2020 affected them.

However, as NAICOM’s directive remained, some displeased operators dragged the regulator to court, using some shareholders’ associations.

On December 9, 2020, the House of Representatives asked NAICOM to suspend the December 31, 2020 deadline set for operators in the insurance industry to recapitalise.

This led the commission to suspend the first phase of the recapitalisation, leaving the second phase scheduled to end by September 2021.

However, some underwriters had declared on their own that they met the requirements before the first phase of the recapitalisation was suspended.

The Managing Director/ Chief Executive Officer, SUNU Assurances Nigeria Plc, Samuel Ogbodu, said the company successfully completed the first phase of its recapitalisation plan by increasing its shareholders’ fund to N6.61bn in 2020 from N3.47bn in 2019.

NSIA Insurance also said it successfully completed the phase 1 of its recapitalisation exercise to fulfil the requirements for the mandatory minimum paid-up share capital policy for a composite insurance firm in Nigeria.

FBN General Insurance said it was one of the few general insurance businesses to meet the first phase of recapitalisation before the directive was put on hold.

Lasaco Assurance Plc also said it scaled the first hurdle of the recapitalisation before the suspension.

During the public hearing on Consolidated Insurance Bill 2020 organised by the House of Representatives Committee on Insurance and Actuarial matters in Abuja, the Nigerian Insurers Association recommended introduction of Risk Based Capital in the Consolidated Insurance Bill.

It described it as the right capital model for the insurance industry in order to align the Nigerian insurance market with international best practice and reposition the industry for accelerated growth and development.

In adopting risk based capital adequacy template, the Chairman, NIA, Mr Ganiyu Musa, said the association took cognisance of the need to consider insurance risk, market risk, credit risk, and operational risk as well as the need to apply such capital charges on assets and liabilities (all capital resources inclusive).

He hinged the association’s position on the 2013 IMF report on the Nigerian insurance industry which prescribed the risk based capital model as most suitable for the Nigerian insurance market.

According to him, the IMF report was duly acknowledged and admitted by the National Insurance Commission as the right capital framework for the market, as it sought to limit the capital required by operators to the level of risks they can carry.

When the Bill is eventually signed into law in line with this proposal, he said, it would lay to rest the contentious issue of the definition of capital which had been a major point of the association’s engagements with the NAICOM on the recapitalisation.

“We are convinced that risk based capital adequacy template is the best fit for the insurance industry in Nigeria especially given the fact that the 2013 IMF report has prescribed it and the commission agreed with it,” he stated.

He added that this would also align the definition of insurance with the various positions such as International Association of Insurance Supervisors recommendations.

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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Cornerstone Insurance PLC Announces Delay in Filing Q2 2024 Financial Statements

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Cornerstone Insurance PLC, a prominent player in Nigeria’s insurance sector, has informed shareholders and stakeholders about a delay in filing its Unaudited Financial Statements for the second quarter (Q2) of 2024.

This delay, as disclosed by the company, stems from unforeseen challenges related to the implementation of the International Financial Reporting Standards (IFRS) 17.

The company, in a statement released today, cited that the introduction of IFRS 17 Accounting Standards necessitated significant changes in reporting methods.

These changes, in turn, disrupted the audit process and consequently delayed the preparation of the Q2 Unaudited Accounts.

Cornerstone Insurance PLC’s Audited Accounts and Financial Statements for the year ended December 31st, 2023, have already been filed and approved by the regulatory bodies.

However, the transition to IFRS 17 has posed unexpected hurdles, causing setbacks in the timely preparation of subsequent financial reports.

In response to the delay, Cornerstone Insurance PLC has sought and obtained approval from the Nigerian Exchange Limited (NGX) to extend the deadline for filing its Q2 Unaudited Financial Statements.

The company expressed regret over the inconvenience caused by this delay but assured stakeholders of its commitment to ensuring the submission and publication of the Q2 Financial Statements by August 31st, 2024.

The delay announcement comes amid efforts by regulatory authorities to enhance financial reporting standards across Nigeria’s corporate landscape.

Cornerstone Insurance PLC remains dedicated to meeting regulatory obligations while maintaining transparency and accountability in its financial disclosures.

Investors and stakeholders are advised to monitor further updates from Cornerstone Insurance PLC as the company works diligently to finalize its Q2 2024 financial reporting process.

For more information and updates, shareholders can visit Cornerstone Insurance PLC’s official website or contact the company’s investor relations department directly.

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Sanlam to Acquire 60% Stake in MultiChoice’s Insurance Arm for R1.2bn

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South African insurance giant Sanlam Limited has announced plans to acquire a 60% stake in NMS Insurance Services (NMSIS), the insurance subsidiary of pay TV operator MultiChoice Group, for R1.2 billion.

This strategic acquisition aims to enhance Sanlam’s footprint in the African insurance market and leverage MultiChoice’s extensive subscriber base across the continent.

In a joint statement released on Tuesday, both companies revealed that the deal includes a long-term commercial arrangement designed to expand insurance and related financial services to MultiChoice’s diverse audience.

The transaction also features a performance-based cash earn-out potential of up to R1.5 billion, contingent upon the gross written premium generated by NMSIS by the end of 2026.

Paul Hanratty, CEO of Sanlam Group, expressed optimism about the acquisition, stating, “This partnership provides a unique opportunity to combine our market presence and technological capabilities, fostering growth and market penetration while creating synergies beneficial to all stakeholders.”

Calvo Mawela, CEO of MultiChoice, highlighted the strategic significance of the collaboration, noting, “This deal not only enhances the value we provide to our subscribers but also taps into Sanlam’s expertise to drive innovation and growth in our insurance offerings across Africa. It’s a testament to the hard work and dedication of our teams.”

NMSIS has shown impressive growth, with gross written premiums increasing by 36% year-on-year and profit after tax rising by 51% in the first quarter of 2024.

MultiChoice plans to use the proceeds from the sale for working capital while retaining a 40% interest in NMSIS.

The move comes as MultiChoice faces economic challenges, including a 13% drop in subscribers in key markets such as Nigeria, Angola, Kenya, and Zambia due to economic hardships and currency devaluations.

Despite these setbacks, the partnership with Sanlam is seen as a strategic step to bolster its financial services offerings and stabilize revenue streams.

The announcement also follows recent regulatory developments, with MultiChoice entering a Cooperation Agreement with Groupe Canal+ SA after Canal+ acquired a 45.20% stake in MultiChoice, necessitating a mandatory offer under South African takeover regulations.

As the African insurance market continues to grow, Sanlam’s acquisition of a significant stake in NMSIS positions both companies to capitalize on emerging opportunities, providing innovative insurance solutions to millions of customers across the continent.

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Heirs Insurance Group Unveils Revolutionary Website for Seamless Insurance Experience

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Heirs Life Assurance- Investors King

Heirs Insurance Group has launched a website designed to revolutionize the insurance experience for its customers.

With a focus on simplicity, accessibility, and personalized service, the new website aims to streamline the process of obtaining insurance coverage and empower customers to make informed decisions about their insurance needs.

The website boasts a range of innovative features that make navigating insurance options easier than ever before.

From simple and intuitive navigation menus to personalized insurance recommendations, the website is designed to guide customers through every step of the insurance process quickly and efficiently.

According to Ifesinachi Okpagu, the Chief Marketing Officer of Heirs Insurance Group, the new website embodies the company’s commitment to delivering exceptional customer service.

“Today’s customers want simplicity, and this new website delivers on that request,” Okpagu said. “We are empowering customers to take control of their lives, their businesses, assets, and their most cherished people.”

One of the key features of the website is its personalized insurance experience, which takes customers through a short journey to help them identify the best insurance plan for their needs.

Whether customers are looking for coverage for their home, car, business, or loved ones, the website provides tailored recommendations to ensure they find the right insurance solution quickly and easily.

With its user-friendly interface and innovative features, the new website from Heirs Insurance Group sets a new standard for the insurance industry, making it easier than ever for customers to protect what matters most to them.

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