Insurance Firms To Recapitalize

Insurance companies yesterday got a 13-month ultimatum from the National Insurance Commission (NAICOM) to recapitalise or lose their licences.

The ultimatum, which became effective from Monday, raised the minimum paid-up share capital of a Life insurance company from N2 billion to N8 billion; Non-Life insurance from N3 billion to N10 billion and Composite insurance from N5 billion to N18 billion.

It was learnt that Re-insurance companies had been directed to raise their capital base from N10 billion to N20 billion. With the directive, the capital injection requirement has risen by 400 per cent (Life); 333.33 per cent (Non-Life); 360 per cent (Composite) and 200 per cent (Re-Insurance).

The directive was contained in a circular issued by NAICOM to Chief Executive Officers and Managing Directors of insurance companies, mandating them to comply on or before June 30, next year.

The circular, however, exempted micro insurance companies. It (circular) reads: “In 2005/7, the insurance industry witnessed its last capitalisation and despite the astronomical increase in value of insured assets, consequent exposure to higher level of insured liabilities and operating cost of insurers, the same capital continued to rule in the industry.