At least six insurance companies have notified the National Insurance Commission (NAICOM) of their plans to merge as part of their efforts in meeting up with the regulator's recapitalisation requirements.
NAICOM director of policy and regulation, Mr Pius Agboola, said that the insurers were among the 44 that had their recapitalisation plans approved by the regulator, according to a report in Naira Metrics.
Mr Agboola also said that NAICOM has barred insurers from borrowing money to meet their recapitalisation requirements. He added that while some of the insurance companies that borrowed funds during the last recapitalisation exercise in the industry in 2003-2007 were doing well, the majority the companies had been acquired by foreign investors.
Meanwhile, CSL Stockbrokers said in a commentary, “While we think the impending consolidation in the industry would likely result in the emergence of bigger, stronger and more resilient players that will be better placed in underwriting risks, absorbing macroeconomic shocks and contributing to financial system stability, we are concerned that the major growth barrier in the industry – low Insurance penetration estimated at about 0.3% – may hinder the players from unlocking the potential of the industry.”
There are 57 insurance companies in Nigeria, comprising 14 life insurers, 28 general insurers, 13 composite insurers and two reinsurers operating in the country, according to the Nigerian Insurers Association.