In order to meet the new regulatory requirement set by the National Insurance Commission (NAICOM), six insurance companies have made known their plans to merge.
Director, Policy, and Regulation, NAICOM, Pius Agboola, disclosed that some other insurance companies were also looking for partners to merge with but only six companies have indicated an interest in mergers and acquisitions out of 44 companies reviewed by the commission.
“Only six companies have indicated interests in mergers and acquisitions out of 44 companies reviewed,” he said.
The director stated that NAICOM had restricted the insurance companies from borrowing money to meet their recapitalisation requirements, adding that while some of the companies that borrowed funds during the last recapitalisation exercise in the industry were doing well, the majority the companies had been acquired by foreign investors.
“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 helm of affairs is not doing well, they will fire him and employ another person,” Agboola said.
Agboola said that the ongoing recapitalisation exercise would give companies in the industry the capital base and improved capacity to underwrite more risks, Punch reported.
Meanwhile, so far most of the companies have planned to raise funds through share premium, capitalisation of retained earnings, Initial Public Offerings, right issues, and private placement.
Recall that NAICOM in 2019 raised life insurance companies’ capital from N2 billion to N8 billion, general companies got a raise from N3 billion to N10 billion, while composite insurance companies’ capital was raised from N5 billion to N18 billion. The regulator also increased the capital of reinsurance companies from N10 billion to N20 billion.
Note that there are 57 insurance companies, comprising 14 specialist life insurance firms, 28 general insurance companies, 13 composite insurance companies and two reinsurance companies operating in the country, according to the Nigerian Insurers Association.