The Director, Policy & Regulation, Directorate of the National Insurance Commission (NAICOM), Pius Agboola, has hinted that Insurance Companies would no longer be allowed to borrow for recapitalisation.
Agboola said the loan option wouldn’t be available as the Commission begins to encourage merger and partnership among insurance companies in Nigeria. While admitting that companies which borrowed for recapitalisation are doing fine, Agboola said merging is better.
Several insurance firms merged to become leaders of the insurance market during the 2007 recapitalisation. Four companies merged to form Custodian; four merged into Veritas Kapital; two merged to become LASACO Assurance, two other firms merged to become Linkage Assurance.
(READ MORE: FG appoints new NAICOM acting commissioner)
Similarly, three firms merged to become NEM Insurance; three companies merged to become Regency; three merged to become Sterling; two merged to become Consolidated Hallmark while another two merged into African Alliance.
The reason behind the merging of these companies is to fully attain the potential of the insurance sector. Speaking about the essence of partnership, Agnoola said, “If any of them wants to bring in money, they must become owners and manage the company together, not give them money and go and sit down and expect them to pay back. When they are owners, they will have directors; they know how the company is being run. If the person at the helms of the affair is not doing well, they will fire him and employ another person.”
Foreigners are taking over: The potential of the Insurance market in Nigeria is luring interest from foreign investors and gradually shifting the landscape from local investors. Agboola said this shows the level of opportunities in the sector.
According to him, domestic operators favour foreign take–over as they strengthen their position in the market. Some of the foreign companies that have tapped into the insurance market includes Prudential Africa, Axa Mansard, Allianz Group and Old Mutual.
Agboola stated that, “Considering the high population and developing industrial and commercial sectors, the potential for insurance business is very high. The high potential of insurance business is also evident from foreign investors.”
Nairametrics had recently reported that NAICOM approved the 39.25% acquisition of Royal Exchange General Insurance Company Limited (REGIC) by Germany’s InsuResilience Investment Fund (IIF).
(READ FURTHER: Why some NAICOM workers are threatening to go on strike)