Determined to correct some anomalies of the previous insurance industry recapitalization exercise and to protect shareholders’ fund, the National Insurance Commission (NAICOM) said that recapitalization proceeds from insurance companies should be with the Central Bank of Nigeria (CBN) escrow account.
The Commission’s Director, Policy and Regulation Directorate, Pius Agboola who disclosed this during an interactive session of the regulator with shareholders’ associations of quoted insurance companies in Lagos, assured shareholders that their investments are secured.
Agboola who represented the acting Commissioner for Insurance, Sunday Thomas, said, “The recapitalization fund with CBN escrow account cannot be withdrawn without NAICOM’s approval after a time frame.
“NAICOM will make sure that the money that insurance companies have collected is not wasted. NAICOM will assist shareholders. So, we will supervise the escrow account.”
It would be recalled that NAICOM recently reviewed the existing minimum paid – up capital share of Life Insurance business and raised it from N2 billion to N8 billion.
General Insurance business was raised from N3 billion to N10 billion, Composite business was raised from N5 billion to N18 billion while reinsurance business was raised from N10 billion to N20 billion.
The new paid-up share capital requirement takes immediate effect for new applications made to NAICOM by companies seeking to carry on insurance business in Nigeria and existing insurance and reinsurance companies are required to fully comply with the new minimum capital requirement not later than June 30, 2020.
Agboola while giving options on how insurance companies can raise the money said, “Insurance companies can raise the money through Initial Public Offering (IPO), right issues, capitalisation of retained earnings and other means such as private placement, merger or acquisition.”
He however condemned borrowing adding that, “If any company wants to go for merger and acquisition or IPO, it must give date because all options have time frame.”
So far, the director said NAICOM has approved the recapitalization plans of 44 companies, rejected that of six insurance companies of which they have been directed to make amendments, two companies are under review, while two companies have not submitted any plans at all to the Commission.
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