{"id":25291,"date":"2018-07-26T15:53:08","date_gmt":"2018-07-26T14:53:08","guid":{"rendered":"https:\/\/nationalwire.com.ng\/?p=25291"},"modified":"2018-07-26T15:53:08","modified_gmt":"2018-07-26T14:53:08","slug":"insurance-firms-get-n15b-recapitalisation-mandate","status":"publish","type":"post","link":"https:\/\/nationalwire.com.ng\/sub\/insurance-firms-get-n15b-recapitalisation-mandate\/","title":{"rendered":"Insurance Firms Get N15b Recapitalisation Mandate"},"content":{"rendered":"

Insurance companies willing to play at the highest level in the country yesterday got an order from the regulator to recapitalise to the tune of N15 billion.<\/p>\n

The National Insurance Commission (NAICOM) which announced the new plan yesterday, also said the firms in the sector will from January be classified into three tiers, based on their ability to capitalise and the functions they perform.<\/p>\n

This is in line with the Risk Based Supervision (RBS) model which requires a composite insurance company that intends to be a Tier 1 player to have a minimum capital of N15 billion; A Tier 2 player is required to have a minimum solvency capital of N7.5 billion while a Tier 3 player is expected to have N5 billion minimum capital.<\/p>\n

Under life companies class of business, a Tier 3 company will only be allowed to underwrite Individual Life, Health Insurance and Miscellenous Insurance business, Tier 2 company will underwrite all Tier 3 risks and Group Life Assurance while Tier 1 company will be allowed to underwrite all Tier 2 risks and Annuity business.<\/p>\n

Hitherto, the capitalization of insurance industries, which last took place in 2007, gave Tier 1 firms N5billion capitalization base, Tier 2 N3bilion and Tier 3 N2billion.<\/p>\n

Commissioner for Insurance Mohammed Kari, announced the new threshold at an emergency meeting with Chief Executive Officers (CEOs) of the 57 licensed\u00a0 insurance companies yesterday.<\/p>\n

He said no insurance company\u2019s licence will be withdrawn but the new arrangement will be implemented from January 1.<\/p>

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Kari, who was represented by the Director, Supervision, the National Insurance Commission (NAICOM) Barineka Thompson, described the recapitalisation as desirable because while inflation and interest rates had increased in the last 10 years, insurers were still operating with the 2007 capitalization.<\/p>\n

He said: \u201cInterest rate has gone from single to double digit, interest rate has increased over time and with many macroeconomic and institutional factors on the upward trends, while the industry still maintains the same capitalisation in the last 10 years.<\/p>\n

\u201cSo, it is desirable for operators to now choose which tier they want to operate in. Some companies are finding it difficult to fulfill their obligations to their policy holders and shareholders because they are carrying risks above their limits.\u201d<\/p>\n

He added that the initiative would enhance profitability of insurers through optimal capitalization, adding that there is no cancellation of licence, but operators will be subjected to solvency control levels.<\/p>\n

The commission has slated August 6-10 for awareness session with board members and key management staff of insurance companies. The transition guideline will be released on August 3. Issuance of notification letter on assessed capital level will be between August 13 and 17 and submission of board\u2019s decision by operators to NAICOM will be not later than September 14.<\/p>\n

Deputy Commissioner for Insurance Mr. Sunday Thomas added that the recapitalisation scheme is aimed at developing and applying appropriate tools that consider the nature, scale and complexity of insurers, as well as non-core activities of insurance groups, to limit significant systemic risk and thereby achieve soundness of insurance companies and contribute to the achievement of stability of the financial system.<\/p>\n","protected":false},"excerpt":{"rendered":"

Insurance companies willing to play at the highest level in the country yesterday got an order from the regulator to recapitalise to the tune of N15 billion. The National Insurance Commission (NAICOM) which announced the new plan yesterday, also said the firms in the sector will from January be classified into three tiers, based on …<\/p>\n","protected":false},"author":6,"featured_media":25292,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[23,17],"tags":[2797],"coauthors":[2391],"class_list":["post-25291","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-business","category-news","tag-insurance-firms"],"yoast_head":"\nInsurance Firms Get N15b Recapitalisation Mandate - National Wire<\/title>\n<meta name=\"description\" content=\"Insurance companies willing to play at the highest level in the country yesterday got an order from the regulator to recapitalise to the tune of N15 billion.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nationalwire.com.ng\/sub\/insurance-firms-get-n15b-recapitalisation-mandate\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Insurance Firms Get N15b Recapitalisation Mandate - 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