Share holders of Wapic insurance at its Annual General Meeting (AGM) gave management approval to raise up to N10 billion in fresh capital. The company is doing so in order to meet the risk based supervision by the National Insurance Commission (NAICOM). Risk based supervision means insurance companies will only be able to insure risks that their capitalization can conveniently accommodate.
Chairman of the company Aigboje Aig Imokhuede compared the insurance recapitalization to a similar exercise in the banking industry. Companies that have sizeable capital would be able to insure bigger risks.
While the shareholders may have given their approval based on the improved performance of the firm, they may have done so without looking at the deeper implications. Raising capital may mean the company will not pay dividends anytime soon.
Wapic insurance was founded in 1950 and listed on the Nigerian Stock Exchange (NSE) in 1998. The company has two subsidiaries Wapic Life insurance and Wapic insurance Ghana. Chairman of the company, Aigboje Aig-Imoukhuede took a majority stake in the firm shortly after stepping down as MD of Access bank. Intercontinental bank which was acquired by Access bank had a majority stake in the insurance firm. Access bank had earlier spun off Wapic shares to its shareholders.