LASACO Assurance Plc has disclosed plans to beef up the capital base of the insurance firm to meet the National Insurance Commission’s (NAICOM) recapitalisation directive.
The Managing Director, LASACO Assurance Plc, Segun Balogun, assured that the company is capable of meeting the new capital base.
How LASACO plans to recap: To meet the N18 billion benchmark, Balogun disclosed that the firm would first raise capital through private placement from its top 10 shareholders before approaching the shareholders in the public market.
The new capital structure for Life, Non-Life and Composite insurance companies, including reinsurance companies, was increased from N2 billion, N3 billion, N5 billion and N10 billion to N8 billion, N10 billion, N18 billion and N20 billion respectively.
He said, “There are other plans on the ground that in case of failure to raise money from the public. We have over N4 billion, we are going to raise N13.4 billion and we have the assurance that 70% is coming from major investors, 30% will be done privately.
“There is an extension, we are still working against June and by April, we will be done with our recapitalisation plans.”
Note that Insurance companies have until the ending of December 2020 to recapitalise after NAICOM bow to pressure, extending the previous deadline of June 2020.
[READ MORE: Due to lack of ‘process’, NAICOM says no insurance firm has met recapitalisation requirement)
The deadline was extended after several criticisms of the timeframe and the impact the policy would have on the number of available underwriting firms. The recapitalisation plan is expected to reduce the number of insurance firms operating in the insurance market. It is believed that this will improve the standard of operation of the existing firms after the exercise.
No acquisition or merger for LASACO? Balogun’s statement shows LASACO Assurance isn’t considering acquisition or merger to achieve the recapitalisation, unlike Cornerstone Insurance. Cornerstone Insurance is in merger talks with some insurance companies ahead of the deadline.
