Economy
New Solvency Requirement will Boost Financial Health of Insurance Firms—Expert
By Modupe Gbadeyanka
Managing Director of Leadway Assurance Company Limited, Mr Oye Hassan-Odukale, has commended the National Insurance Commission (NAICOM) for introducing the Tier-Based Minimum Solvency Requirement (TBMSR), saying it was long overdue.
According to the insurance expert, with this restructuring, insurers do not have to be compelled to increase capital to underwrite risks that stress their capital without delivering commensurate returns to capital providers/shareholders.
Mr Hassan-Odukale believes that the restriction will foster the emergence of players with capacity to become retail specialists or become specialist underwriters of big-ticket risks in critical sectors of the economy, such as the aviation and oil & gas, whilst accelerating the growth of the industry and its contributions to the Gross Domestic Product (GDP) of the country.
The Leadway Assurance chief, who doubles as Chairman of the Sub-Committee on Publicity and Communication of the industry’s Insurers’ Committee, said the introduction of the solvency requirement for insurers in Nigeria commencing January 1, 2019, will help to restructure the market in a way that insurers can choose which part of the consumer segment (retail, commercial or industrial) is best served based on the capital fund that it holds or is able to deploy.
“The news of NAICOM’s introduction of TBMSR is a positive one. I am confident that it is an initiative with potential upside for the industry to grow and take its rightful position as a formidable contributor to our national economic activities, growth and development as it is in developed economies.
“It is high time we moved beyond the 0.3 per cent contribution to GDP and improve our ranking within the comity of African insurers (heavily dominated by South Africa) as measured by the African Insurance Barometer.
“Overall, we should expect an improvement in the capacity and reputation of the industry on the back of unwavering market discipline, improved claims settlement, stronger local retention, increased prudence and promotion of appropriate pricing,” he submitted.
Under the new Tier-Based Minimum Solvency Requirement (TBMSR), the minimum capital requirement (policyholders’ surplus/shareholders’ funds) for insurance companies remains as the base Tier 3 capital (N3 billion for General Insurance; N2 billion for Life). Tier 3 companies are now only able to write retail insurances (micro insurance, motor, fire, agriculture, compulsory liability insurances, individual life, health and miscellaneous insurance).
Tier 2 companies are required to have 150 percent of the base capital (N4.5 billion for General Insurance and N3 billion for Life) based on the types of risks written. Tier 2 companies can write retail insurance as prescribed under Tier 1, including commercial and industrial risks and group life assurance.
Tier 1 companies are ultimately required to have 300 percent of the base capital (N9 billion for General Insurance and N6 billion for Life) to write all risks including annuity and exclusively Special Risks (e.g. energy and aviation risks) which are highly capital intensive in terms of risks retained on the balance sheet of the insurer in addition to any reinsurance capital purchased.
Automatically, composite companies (Life and General Insurance) at any tier only need add both sides to make up the required capital, so you will have N5 billion for Tier 3, N7.5 billion for Tier 2 and N15 billion for Tier 1.
Speaking on how the TBMSR will affect the solvency margin of Nigerian Insurers, Mr Hassan-Odukale added, “It is important to note that all insurance companies already fall within each restructured tier therefore, no company needs to raise additional capital unless they have existing capital deficiency or prefer to play within a tier above its current capital level.
“Leadway Assurance which falls within the Tier 1 bucket currently has shareholders’ funds valued in excess of N40 billion compared to N15 billion required for a Tier 1 composite insurer.
“A number of other Nigerian insurers are also within this tier. We believe this TBMSR is good for our industry as it helps to promote the financial health of insurers and ultimately consumer confidence. Nigerian insurers are already at different levels of the tiered system.
“Each company will then be placed within the bucket that they already belong. Should companies now decide to play at a level higher than their current tier, the shareholders can take capital actions either by mergers or injection of new funds. With the TBMSR, insurers simply play within the limit of their solvency capacity,” Mr Hassan-Odukale said.
He also added that unlike the previous capitalization exercise, no insurer is being asked to shore up capital and neither will anyone’s licence be withdrawn either, stating that companies simply get to choose which tier they want to operate in, ensuring that they stay within their capacity so that they are able to meet the obligations of the risks that they carry.
“If a Tier 3 company then wants to play at Tier 1 level, nothing stops them from embracing voluntary merging with other companies in order to scale up their capacity and build more formidable and globally-competitive institutions that would create value for stakeholders and investors.
“At the end, the major difference between the three tiers will be in the nature of risks underwritten by each insurer depending on each insurer’s current capital position. To reiterate, the choice of whether to increase capital is left to the insurer who must decide within which tier it wants to play the market as the regulator has not required any company to increase capital above the current minimum.”
By Adedapo Adesanya
Central Securities Clearing System (CSCS) Plc kept the NASD Over-the-Counter (OTC) Securities Exchange in the green territory by 0.04 per cent on Friday, July 16.
The securities depository company added N2.50 to its share price to settle at N95.14 per unit from the preceding session’s N92.64 per unit.
However, FrieslandCampina Wamco Nigeria Plc slid during the session by N5.85 to N141.81 per share from N147.66 per share.
But when the bourse closed for the day, the market capitalisation increased by N1.08 billion to N2.593 trillion from N2.592 trillion, while the NASD Security Index (NSI) appreciated by 1.80 points to 4,320.67 points from 4,318.87 points.
During the session, the value of securities slid by 38.9 per cent to N63.5 million from N104.1 million, the volume of securities went down by 34.5 per cent to 1.2 million units from 4.8 million units, and the number of deals declined by 15.4 per cent to 33 deals from 39 deals.
Great Nigeria Insurance (GNI) Plc was the most traded stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 75.4 million units traded for N5.3 billion.
GNI Plc also ended the day as the most traded stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, followed by Infracredit Plc with 2.3 billion units sold for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Dipo Olowookere
The bulls regained control of the Nigerian Exchange (NGX) Limited on Friday after surrendering power to the bears a day earlier as a result of mild selling pressure.
Yesterday, the Nigerian bourse rebounded by 0.54 per cent, mainly due to the gains recorded by First Holdco and others.
Data harvested by Business Post indicated that the industrial goods and energy sectors were flat, while the banking index chalked up 3.13 per cent. The insurance space expanded by 1.08 per cent, and the consumer goods counter rose by 0.21 per cent.
Consequently, the All-Share Index (ASI) went up by 1,316.52 points to 243,462.13 points from 242,145.61 points, and the market capitalisation grew by N850 billion to N157.057 trillion from N156.207 trillion.
The market breadth index was bullish during the last trading session of this week, printing 31 appreciating stocks and 23 depreciating stocks, representing strong investor sentiment.
First Holdco led the advancers’ log after it climbed 9.97 per cent to N95.95, Haldane McCall appreciated by 9.94 per cent to N3.65, LivingTrust Mortgage Bank soared by 9.73 per cent to N3.72, LASACO Assurance jumped by 5.26 per cent to N2.00, and Thomas Wyatt gained 5.10 per cent to quote at N3.09.
On the flip side, Red Star Express declined by 9.50 per cent to N20.00, Omatek slipped by 6.08 per cent to N1.70, C&I Leasing shrank by 5.93 per cent to N5.55, Jaiz Bank crashed by 5.03 per cent to N8.50, and Livestock Feed fell by 3.89 per cent to N8.65.
As for the activity chart, market participants bought and sold 685.9 million equities for N42.7 billion in 44,134 deals on Friday versus the 498.5 million equities worth N34.9 billion traded in 39,484 deals on Thursday, implying a rise in the trading volume, value, and number of deals by 37.59 per cent, 22.35 per cent, and 11.78 per cent, respectively.
Investors’ darling for the day was First Holdco, with a turnover of 225.9 billion units valued at N21.0 billion, Guinea Insurance sold 53.4 million units for N45.2 million, Zenith Bank traded 41.5 million units worth N4.7 billion, Access Holdings exchanged 29.1 million units valued at N720.6 million, and UBA exchanged 27.5 million units for N1.2 billion.
By Modupe Gbadeyanka
The Africa Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON) has appealed to the Nigeria Customs Service (NCS) to deepen its sensitisation on the newly introduced Green Tax Surcharge Policy.
The chairman of APFFLON, Mr Akeem Ayobiojo, made this plea on behalf of his colleagues on Tuesday, July 14, 2026, at the Customs House in Abuja, during a stakeholders’ engagement with the agency.
He also called for improvements in the administration of Pre-Arrival Assessment Reports and Post Clearance Audit and the African Continental Free Trade Area (AfCFTA).
Mr Ayobiojo stated that freight forwarders were happy to work with the customs, commending the organisation for implementing Chapter 99, describing it as a major relief for manufacturers.
He, however, emphasised that a deeper understanding of the new tax was necessary for his members, saying more predictable procedures would reduce delays and unexpected costs for importers and freight forwarders.
In his remarks, the Comptroller-General of Customs, Mr Adewale Adeniyi, assured manufacturers, freight forwarders and other players in the nation’s trade sector that the NCS would continue to engage them on fiscal policies affecting their businesses, saying sustained dialogue remains key to resolving implementation challenges and improving the country’s trading environment.
He also promised them the service’s resolve to enhance and facilitate trade, acknowledging that, “Your feedback is important because it helps us understand what is happening in the field, and where necessary, we will take your concerns to the Federal Ministry of Finance and other relevant government institutions.”
Speaking about Authorised Economic Operator (AEO), Mr Adeniyi further explained that Nigeria would not lower the standards required under the Authorised Economic Operator Programme as the initiative is guided by global benchmarks established by the World Customs Organisation (WCO).
On her part, the Deputy Comptroller-General of Customs for Tariff and Trade, Ms Caroline Niagwan, clarified that electric vehicles can be imported without payment of duty only by holders of Import Duty Exemption Certificate (IDEC) issued by the Federal Ministry of Finance.
She also urged importers facing classification disputes to take advantage of the Advance Ruling system, noting, “Once an Advance Ruling is issued based on genuine documentation, importers have certainty on classification, valuation or origin before the goods arrive, thereby reducing unnecessary disputes during clearance.”
