By Modupe Gbadeyanka
The National Insurance Commission (NAICOM) has asked 17 insurance companies in the country to review and resubmit their plans, which highlights how they intend to meet the new capital base requirement requested for by the regulator.
NAICOM had given the underwriters till Tuesday, August 20, 2019 to submit the recapitalisation templates, which should contain a resolution of the board on how the funds for the exercise would be sourced with timelines and deliverables.
“Companies intending to seek funds from the capital markets are required to submit their plan of action on a file-and-use basis.
“Companies that intend to merge or acquire another should submit their proposal after which they must comply with Section 30 and 31 of the Insurance Act 2003,” a circular issued in July and signed by Mr Pius Agboola, the Director in charge of Policy & Regulation Directorate at NAICOM, had said, adding that the agency “shall review and provide responses on the submitted Recapitalization Plans on or before 17th September 2019” stressing that, “The review may require meeting with the board and management of each of the insurance company on its recapitalisation plan.”
In the latest circular last week, which was signed by the Head of Commissioner for Insurance Directorate at NAICOM, Mr Rasaaq Salami, it was stated that a total of 49 plans were received from 47 insurers and two reinsurers.
From the figure, NAICOM said 26 firms were granted ‘No Objection’ to proceed with their plans, 17 had their plans corrected and told to resubmit the revised plans using paid-up capital and not shareholders fund.
In addition, four firms were advised to review their plans of using IPO for not having the requisite 2018 financial statements, while one, which had a pending court case, was asked to resolve it before embarking on recapitalization.
Also, plans of two firms are under review, while three companies are yet to submit their recapitalisation plans, with an operator not meeting the necessary requirements.
In the circular, Mr Salami said NAICOM has informed the affected companies about outcome of their submitted plans.
Business Post reports that this year, NAICOM gave operators a 13-month ultimatum to raise their capital base by at least 100 percent on or before June 30, 2020.
Life insurers were told to raise their minimum paid up capital from N2 billion to N8 billion; general underwriters from N3 billion to N10 billion; while composite and reinsurance companies have new minimum paid up share capital requirements of N18 billion and N20 billion, up from N5 billion and N10 billion respectively.
