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Recapitalisation: Six insurance companies set to merge

In order to meet the new regulatory requirement set by NAICOM, six insurance companies have made known their plans to merge.

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Six insurance companies set to merge as recapitalisation deadline approaches

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 Agbooladisclosed 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. 

NAICOM, Recapitalisation: 44 firms get NAICOM’s nod , NAICOM boss makes case for recapitalisation, insists the exercise will solidify insurance sector , NAICOM extends recapitalisation deadline for insurance companies to meet new capital base, Due to lack of ‘process’, NAICOM says no insurance firm has met recapitalisation requirement, Insurance: Recapitalisation exercise sets consolidation in motion 

 

“Only six companies have indicated interests in mergers and acquisitions out of 44 companies reviewed,” he said. 

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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. 

[READ MORE: Due to lack of ‘process’, NAICOM says no insurance firm has met recapitalisation requirement)

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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. 

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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. 

 

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Coronavirus

COVID-19: Russia produces first batch of its newly approved vaccine

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COVID-19: J&J starts vaccine trials on humans after success on monkeys

Russia announced on Saturday, August 15, 2020, that it has produced the first batch of its newly approved vaccine, Sputnik V, hours after the health ministry reported the start of its production.

The disclosure was made in a statement by the Russian Health Ministry and quoted by Russian news agencies.

This is coming some days after the Russian President, Vladimir Putin, announced the registration of the world’s first COVID-19 vaccine in what could be described as a step ahead of other vaccine developments.

The announcement is seen as a propaganda coup for the Russian government against the west amid a global race to develop vaccines against the coronavirus disease.

The announcement of the vaccine registration by Putin was met with caution from scientists and the World Health Organization (WHO), who said that it still needed a rigorous safety review. Some of the scientists fear that with this fast regulatory approval, Russia may be putting national prestige ahead of safety.

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Putin had said the vaccine was safe and that one of his own daughters had been inoculated, although the final stage testing involving over 2,000 people just started this week. Such trials are considered very important before a vaccine can secure regulatory approval.

Russia has said the vaccine which is the first for the coronavirus disease to go into production, will be rolled out by the end of August.

The Gamaleya Research Institute, which developed the vaccine in collaboration with the Russian Defence Ministry, said that Russia would be producing about 5 million doses a month by December or January.

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Companies

Heineken scoops more Nigerian Breweries shares in insider disclosure

The company has about 8 billion shares outstanding with Heineken as the majority shareholder.

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Nigerian Breweries major shareholder, Heineken disclosed it purchased 274,542 units at an average price N35.76 per unit.

Insider disclosures are reported on the Nigerian Stock Exchange as a regulatory requirement especially when it informs a major shareholder or director of a company purchasing shares in the company they own.

In a related development, its chairman Chief Kolawole Babalola Jamodu also purchased 10,000 units at N37 per unit.

Nigeria Breweries closed at N36 per share on Friday trading at a price to earnings of 34x. The company has about 8 billion shares outstanding with Heineken as the majority shareholder.

What this means: Insider purchases are often an indication of how shareholders perceive the company’s valuation. It can also mean a lot of things from a possible capital raise to a strengthening of their existing holdings.

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Nigerian Breweries has struggled for growth over the last few years as consumers continue to experience a change to taste and preference for alcohol.

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Business

Lagos announces additional tax incentives for businesses, individuals

Waiver of penalty for late payment of liabilities under PAYE that were due during the period when the state was under lockdown.

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LIRS further extends deadline for filing annual return by one month

The Lagos State Government has announced additional tax incentives and reliefs for businesses and individuals in the state, as part of measures aimed at reducing the burden on taxpayers amid the COVID-19 pandemic.

The disclosure was made in a public notice issued by the Lagos State Internal Revenue Service (LIRS) and signed by its Executive Chairman, Ayodele Subair.

The additional tax incentives are part of the several measures implemented by the LIRS to mitigate the impact of the coronavirus pandemic on taxpayers in Lagos and ensure business continuity.

The government had earlier given 3 months extension of deadline for filing annual returns from March 31 to June 30, 2020.

The additional measures being implemented by the state government include:

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  • LIRS shall be allowing on a case by case basis, the payment of outstanding liabilities in instalments to ease cash flow challenges that may affect taxpayers.
  • Waiver of penalty for late payment of liabilities under PAYE that were due during the period when the state was under lockdown (March-May 2020).
  • Waiver of penalties due on late filing of 2020 annual tax returns (Form A).
  • Waiver of interest and penalty components of outstanding tax audit liabilities from 2009 to 2015 for entities that present and keep to a structured payment plan that terminates on or before December 31, 2020.
  • Grant of tax credits of 20% of cash and kind donations made for COVID-19 by resident individuals to Lagos State Government for the 2021 Year of Assessment only subject to a cap of 35% of tax due.
  • Increase of payment channels to make payment of taxes easier, simpler and more convenient for all.
  • Adopting of video conferencing as the default mode for conduct of Tax Audit Reconciliation Committee (TARC) meetings in consonance with social distancing advisories from Government and other relevant authorities.

The Lagos state government expressed hope that all residents of the state would take advantage of these palliatives and reciprocate the government’s kind gestures by discharging their civic responsibilities by promptly paying their taxes and levies to the state.

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