Chiamaka Ajeamo
The National Insurance Commission (NAICOM) has said it is set to review the recapitalisation plans of insurance firms which it received recently.
The Commissioner for Insurance, Sunday Thomas, disclosed this yesterday at the insurance directors’ conference held in Lagos.
Thomas while urging directors to ensure that their firms are financially sound, said that the Commission was currently collating their various plans and will commence the review soon.
He added that the commission is partnering with other important regulatory bodies and agencies of government for possible alternatives so as to minimise the cost of recapitalisation.
NAICOM had recently in a circular, ‘Re: Minimum Paid Up Share Capital Policy for Insurance Companies and Reinsurance Companies in Nigeria,’ signed by the Director, Policy & Regulation Directorate, , Pius Agboola, instructed insurance firms to tender their recapitalisation plan on or before 20th August 2019 for review.
The commission declared that the minimum paid up capital would be through any or combination of its laid down conditions.
The regulator noted that this included the existing paid up share capital; cash payment for new shares issued; retained earning-capitalisation of undistributed profits; payment in kind (other than by way of cash) for new shares issued such as properties, and T-bills. Others are shares, and bonds which must be converted to cash not later than three months to the deadline for recapitalisation and share premium.
The Commission further explained that insurance companies are permitted to use their escrow account with the Central Bank of Nigeria, Shareholders funds, statutory deposit, and mergers and acquisition as options to meet up recapitalisation.
Speaking on the conference with the theme, ‘Corporate Governance’ the panacea for sustainable growth and development of insurance in Nigera’, he said the Commission will continue to bring up reforms and initiatives to make the Nigeria insurance sector solid and live up to expectations.
“In the last few years, the insurance industry has witnessed series of changes owing to reforms embarked upon by NAICOM. These reforms include financial reporting, No Premium, No Cover, Corporate Governance Code, Risk Based Supervision, Information and Communication Technology advancement, Financial Inclusion, Claims Settlement, Market Conduct, Expansion of Distribution Channels, Recapitalisation with all aimed at building confidence, trust and enhancing our market value and profitability.
“The Commission shall continue to introduce new reforms and initiatives in line with international best practices in our march towards achieving the full potentials of the industry.
“The Insurance in Nigeria with a contribution to the nation’s GDP at less than 1per cent has underperformed its potential especially when compared with other sectors in the financial services industry.
“I believe that once we can successfully navigate this corner, we could be on our way to entrenching a financially solid, vibrant, viable and active insurance market that would bring about not only an increase in penetration but a substantial increase in the industry’s contribution to GDP. The will also simulate accumulation of long-term funds for infrastructural financing, job creation, and an improved Return on Investment”, he stated.