AIICO Insurance Plc is planning to increase its share capital from N10 billion to N18 billion. The company made this disclosure in a notification announcing its forthcoming Extra-Ordinary General Meeting (EGM), which is scheduled to hold on Monday, October 14, 2019.
Should AIICO Insurance secure the shareholders’ approval at the EGM, the company’s share capital will increase by 80%.
In a statement that outlines the EGM’s agenda, the company made known that “the share capital will be raised by the creation of 16 billion ordinary shares of 50 kobo each, ranking pari passu in all respects with the existing ordinary shares of the Company, and the capital clause of the Memorandum and Articles of Association of the Company, will be altered accordingly.”
Nairametrics understands that AIICO Insurance’s decision to raise capital might have been reached in view of the recent increase in capital requirements by the National Insurance Commission (NAICOM).
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Recall that not too long ago, the National Insurance Commission (NAICOM) introduced the tier-based minimum solvency capital, a situation that was later cancelled after it was challenged in court.
Specifically, the capital requirements for life insurance firms were increased from N2 billion to N8 billion. Insurance firms underwriting general business have been mandated to shore up their capital from N3 billion to N10 billion.
Composite insurance firms, that is, firms underwriting both life and general business will raise their capital from the current N5 billion level to N18 billion. Reinsurance firms will move up from the current minimum capital of N10 billion to N20 billion.
What you should know: Insurance companies in Nigeria are currently making concerted efforts to raise their capital bases. It is expected that there will be a flurry of Rights issues, public offers, and even IPOs following this development. Just like it happened in the banking sector during Soludo’s era, some insurance companies may even need to consider mergers and acquisitions in order to meet the capital requirements.