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Insurance firms are reportedly selling off assets to meet NAICOM’s recapitalisation deadline

Some insurance firms in Nigeria have reportedly resorted to selling off their real estate assets, as the new recapitalisation deadline set by NAICOM draws nearer.

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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, Insurance firms are reportedly selling off assets to meet NAICOM’s recapitalisation deadline, Insurance: NAICOM mulls extension of recapitalization exercise

Some insurance firms in Nigeria have reportedly resorted to selling off their real estate assets, as the new December 2020 recapitalisation deadline set by the National Insurance Commission (NAICOM) draws nearer.

As Nairametrics earlier reported, NAICOM is requiring that all the insurance companies offering Life, Non-Life, Composite and reinsurance packages, must increase their capital base from N2 billion, N3 billion, N5 billion and N10 billion to N8 billion, N10 billion, N18 billion and N20 billion, respectively.

Niger Insurance appoints Igbiti as MD 

As expected, the development threw a lot of insurance companies into a frenzy, with many scampering to meet the deadline. Some have even resorted to raise capital through rights issues and commercial paper issuances.

And now, other insurance operatoes are exploring selling off their real estate properties in order to shore up capital and fulfil the financial requirement.

It should be noted that NAICOM is not recognising real estate properties as capital in the recapitalisation process. This is why these insurance companies are having to sell off their properties in order to raise cash.

[READ MORE: NAICOM set to support firms unable to meet recap plan)

Unfortunately, they are facing some challenges in this regard. According to Daily Sun, saturation in the Nigerian real estate sector is making it difficult for some of the insurance companies to find potential buyers for their properties. Some of these insurance companies are AXA Mansard and Niger Insurance.

Sigma Pensions

On the other hand, the Chief Executive Officer of Cornerstone Insurance Plc, Ganiyu Musa, disclosed that for a long time, his company resisted the idea of selling off its landed properties until it had no choice but to. According to him, the company has been able to realise billions of naira from the sale of some of its real estate assets. He said:

“Of course, our original intention was to hold it for the long term but shortly after we completed it, NAICOM then came up with the recapitalisation programme and unfortunately, one of the provisions of the exercise is that investments in properties would not be allowed as admissible asset.  

READ MORE: AMCON possesses APC’s chieftain’s assets over N1 billion debt 

“So, we are now in a situation where we have invested about N4 billion of our funds and the regulator is saying, ‘Oh sorry! This N4 billion will not count.’ We took the big decision to sell the property which we did at a very handsome price. 

“And just in one fell swoop, it resolved many issues. We now have a significant amount of liquidity, we do not have the headache of recapitalisation and we have done what the regulator wants, which is to convert any property to cash.”  

Stanbic 728 x 90

Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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#DigitalSkillsTraining: FG announces conclusion of selection process

Only successful applicants that are contacted by the Ministry are to report at the training venue.

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President Buhari to address Nigerians on Lekki toll plaza shootings after investigation , Youth Investment Fund:  Ministry of Finance and CBN to launch provision of funds- Minister, Federal Ministry of Youth and Sports launch DEEL initiative

The Federal Government through the Ministry of Youth and Sports disclosed that the selection process for the upcoming Digital Skills Training has been concluded for the #DigitalSkillsTraining from April 11th to 30th, 2021.

This was disclosed in a statement by the Ministry of Youth and Sport on Sunday evening.

“The Federal Ministry of Youth and Sports Development wishes to inform the general public and all Nigerian Youths that the selection process has been concluded for successful applicants for the #DigitalSkillsTraining scheduled for April 11 to 30, 2021,” the statement said.

The Ministry added that only successful applicants that were contacted by the Ministry are to report at the training venue. Those who were not successful but arrive at the training would not be admitted.

Upcoming #DigitalSkillsTraining Programmes of the Ministry will be widely publicized on youthandsport.gov.ng , on : noya.ng and on the Ministry’s social media handles,” the statement added.

What you should know 

Recall that Nairametrics reported in November 2020, that the Ministry of Youths and Sports Development announced it will scale up its digital skills training to cover 500,000 youths across the country after securing funding under the COVID-19 stimulus budget.

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Business News

Cost of building materials rise by over 60% in one year

The price of building materials in the market experienced a rise of over 60% in the last one year.

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2nd Niger Bridge, Suicide on Third Mainland Bridge

The cost of Cement, Steel, Tiles and Plaster of Paris (PoP) cement, among others have risen by over 60% between March 2020 and March 2021.

For instance, the cost of steel, which was sold at N234,000 per tonne as of March 2020, had increased to N380,000 at the end of March 2021. This represents a 62% increase within the period under review.

While Dangote Cement increased from N2,600 to N3,800 (though it is sold at N3,600 in some areas in Lagos), Lafarge Cement and BUA Cement increased from N2,400 and N2,250 to N3,600 and N3,250 respectively within the same period.

The price hikes are not limited to the cost of steel and cement alone but also to other materials like Tiles, PoP cement, and roofing sheets.

The cost of super white cement increased from N2,500 (25kg) to N3,700, and the cost of high-quality white cement (40kg) also increased from N4,000 to N6,500.

The cost of gravel increased from N80,000 to N140,000; that of 8mm diameter and 25mm diameter (imported) increased from N234,000 and N245,000 to N330,000 and N380,000 respectively.

Doors are not left out in the hike. Costs of Flush door (high quality), Panel door and Turkish steel door (1,500 x 2,100) also rose from N35,000, N40,000, N165,000 to N60,000, N75,000 and N235,000 respectively.

Why the hike?

Industry experts have attributed the hike to persistent depreciation of the naira and the rising cost of other building materials.

Sigma Pensions

Tunde Oluwole, a fellow of the Nigerian Institute of Builders, explained that the development was caused by high interest rate, inflation, increasing exchange rate and scarcity of forex in the country.

He said, “The increasing prices in Nigeria is a result of the combined effects of high-interest rates, devaluation of the naira, inflation, and non-effective distribution network of the materials.”

To Kolawole Adebisi, an Estate Developer, the development in the cement industry is caused by the ban of imported cement in the country.

He told Nairametrics that he is not against the ban, as the government’s intention is to boost local production of cement but explained that “the local manufacturers were unable to produce enough cement to meet the demand and this contributed to the rising cost of the product.”

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