The National Insurance Commission (NAICOM) has extended the insurance sector's recapitalisation deadline by six months to 31 December 2020. The original deadline was 30 June 2020.
The commission disclosed this in a circular signed by its Director, Policy and Regulation Directorate, Mr Pius Agboola. The circular says that the Commission has reviewed recapitalisation plans submitted by operators and noted inputs from relevant stakeholders and, "therefore, extends the recapitalisation deadline to 31 December 2020".
Mr Agboola, maintained that as parts of measures to ease the recapitalisation burden, some relevant agencies have set up help desks to fast-track processing of applications for 'No Objection' and for approvals.
NAICOM, had in May 2019, announced the following increases in minimum paidup capital:
for life insurers – from NGN2bn ($5.5bn) to NGN8bn;
for general insurers – from NGN3bn to NGN10bn;
for composite insurers – from NGN5bn to NGN18bn, and
for reinsurers – from NGN10bn to NGN20bn.
The new paid-up share capital requirement takes immediate effect for new insurance licence applications made to NAICOM. The directive does not cover takaful operators and microinsurance companies in Nigeria.
Boniface Okezie, who is the national coordinator at the Progressive Shareholders Association of Nigeria, welcomed the deadline extension, saying that several insurers would not have been able to meet the original deadline considering the unstable economy and unclear government policy.
He questioned how successful insurers IPOs or rights issues would be in the present reality, given that existing shareholders of some insurance companies had not been receiving appreciable dividends.
At the end of last year, about 50% of the 58 insurance companies in the country were still at the preliminary stage of implementing their recapitalisation plan.
Shareholders of some insurers had lobbied for more time to meet the new capital requirements, particularly those considering M&As. It takes time to find prospective M&A partners and to arrive at an agreement with them. Time is also needed to complete due diligence work that must be carried out to ascertain the level of liabilities.
According to a report in Leadership, eight insurers were still at the preliminary stages of M&A discussions towards the end of last year .