Nigeria: Insurers want additional 3 years to comply with minimum capital requirement
Some Nigerian investors, shareholders in insurance companies, have submitted a request asking the national insurance regulator to give them additional 3 or 5 years on the initial deadline to comply with the minimum capital requirement. This was reported by local media. Initial deadline was June 30, 2020.
The investors say the additional time will enable them mobilize funds needed for the recapitalization. “In a hurry, many banks merged and today they are still having challenges. If the banks are still struggling, what do you think will happen to the insurance companies that have been given just one year? This is designed to fail, I don’t think we are going to get good results,” commented Bisi Bakare, President of Pragmatic Shareholders Association of Nigeria.
According to Sunny Nwosu, President Emeritus of the Independent Shareholders Association of Nigeria (ISAN), the time available for this process will not allow companies to raise the necessary financing, and will force them to divest shares to foreign investors.
In Nigeria, the National Insurance Commission (NAICOM) granted insurance companies a 13-month period to increase their share capital. This measure, taken in May 2019, aims to improve the financial strength of companies operating in this sector.
This regulatory measure aligns with regulations in almost all insurance markets in Africa. More investment is required in the sector, without accompanying measures that will guarantee growth in profitability. This makes it difficult to provide additional equity capital or to attract new investors.