Cornerstone Insurance Plc is in merger talks with some insurance companies ahead of the recapitalization deadline set by the National Insurance Commission (NAICOM) for the insurance sector.
The move is to strengthen its capital base. The Group Managing director of the company, Ganiyu Musa, said consolidation with other market players was more efficient compared to just seeking fundraising.
Although Musa didn’t reveal the names of the insurance companies negotiating with Cornerstone Insurance, he said consolidation would place the firm in a stronger position, boost expertise, improve technical capacity and even strengthen the capital base of Cornerstone Insurance.
While the consolidation is expected to aid the company’s recapitalization process, Musa said the Cornerstone Insurance had already met the recapitalization request by NAICOM.
According to him, the company has exceeded the N18 billion new minimum capital required by the insurance market regulator. Musa said the sale of its property and head office boosted the liquidity of the company, placing its finances in a better footing.
“The sale of our new property along Lekki axis has further increased the liquidity of the company to meet and surpass expectations. The company would have loved to keep the property for the long run, but we were challenged with the fact that real estate investment is not admissible in the ongoing recapitalisation.
“This necessitated the sale of the building for a handsome amount that covers the cost of the building project and still left with profit. At present, we are in a stronger financial position to scale through the exercise as our balance sheet is stronger and healthy,” he said.
He added that, “The company came out from its loss position of N1.7 billion in 2017 to N1.8 billion profit in 2018, even as the 2019 profit outlook is showing sign of higher profit from that of the previous year, judging from its 2019 third-quarter report.”
While the insurance companies don’t have a choice but meet the deadline through fundraising and consolidation, the chairman of Mutual Benefit Assurance, Akin Ogunbiyi, said the company was against the planned recapitalisation scheme by NAICOM.
The company has said it could survive the wave of the recapitalisation, it said its concern was for other players who might become victims to the plan. Mutual Benefit also condemned the handling of foreign acquisitions in the Nigerian market.