“Only six companies have indicated interest in mergers and acquisitions out of 44 companies reviewed,” revealed Pius Agboola, the Commission’s Director for Policy and Regulation.
The 2019, NAICOM review raised life insurance companies’ capital from US$5.53 million (N2bn) to US$22.23 million (N8bn).
General companies got a raise from US$ 8.30 million (N3bn) to US$ 27.66 million (N10bn), while composite insurance companies’ capital was raised from US$ 13.83 million (N5bn) to US$49.79 million (N18bn).
The regulator also increased the capital of reinsurance companies from US$ 27.66 million (N10bn) to US$55.33 million (N20bn).
NAICOM stated that the insurance firms’ paid-up capital would be their new capital base.
In a recent circular, NAICOM extended the recapitalisation deadline for insurance companies earlier slated for June 30, 2020 to December 31, 2020.
The Director, Policy and Regulation at NAICOM, said that some other insurance companies were also looking for partners to merge.
Agboola noted that NAICOM had barred the regulated entities from borrowing money to meet their recapitalisation requirements.
He said that while some of the companies that borrowed money after the last recapitalisation in the industry were doing well, most of them had been bought over by foreign investors.
According to him, enhanced capital base would enable the insurance companies to have more capacity to underwrite more risks.
He said, “If any of them wants to bring in money, they must become owners and manage the company together.
“When they are owners, they will have directors; they know how the company is being run.
If the person at the helm of affairs is not doing well, they will fire him and employ another person.”
Latest summary of the recapitalisation plans of insurance companies obtained from NAICOM showed that most of the companies planned to raise capital through share premium, capitalisation of retained earnings, Initial Public Offerings, right issues and private placement.