National Insurance Commision (NAICOM) has directed insurance and re-insurance companies to comply with approved minimum paid-up capital not later than Sept. 30, 2021 as against recapitalisation deadline of Dec. 31, 2020.
Mr Pius Agboola, NAICOM Director, Policy and Regulation, on behalf of the Commissioner for Insurance in a circular dated June 3, said that the incidences of the COVID-19 pandemic made it difficult to proceed with the Dec. 31, 2020 deadline.
Agboola explained that in order to mitigate likely negative consequences of the pandemic, the commission extended and segmented the recapitalisation process into two phases
He stated that insurance companies were expected to pay 50 per cent of the minimum paid-up capital while re-insurance companies were expected to pay 60 per cent by Dec. 31, 2020.
“The segmentation is indicated as : Life Insurance business with existing minimum paid-up capital of N2 billion is expected to pay a minimum paid – up capital of N4 billion by Dec. 31, 2020 and N8 billion by Sept. 30, 2021.
“General Insurance business with existing minimum paid-up capital of N3 billion is expected to pay a minimum paid-up capital of N5 billion by Dec. 31, 2020 and N10 billion by Sept. 30,2021.
“Composite Insurance business with existing minimum paid-up capital of N5 billion is expected to pay a minimum paid-up capital of N9 billion by Dec. 31. 2020 and N18 billion by Sept. 30, 2021.
“Reinsurance business with existing minimum paid-up capital of N10 billion is expected to pay a minimum of N12 billion by Dec. 31,2020 and N20 billion by Sept. 30,2021, ” he said.
According to him, insurance companies that fail to satisfy the required minimum paid-up capital by the end of Dec. 31,2020 may be restricted on the scope of business they will transact.
Agboola noted that all insurance companies must fully comply with the required minimum paid-up capital at the end of the recapitalisation on Sept. 30,2021.
Recall that NAICOM had in earlier circulars, directed insurance companies in the country to raise their capital since May 20, 2019 while the deadline of the exercise was fixed for December 31, 2020.
The industry recapitalisation required that Life companies increased their paid-up share capital from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion; and Reinsurance companies from N10 billion to N20 billion.