The National Insurance Commission may reject the plans submitted by some insurance companies on how they planned to meet its recapitalisation requirements.
Sources from the commission told our correspondent that some of the companies submitted plans to the commission which did not align with the directives given to them.
The commission had instructed the companies to submit their recapitalisation plan on or before 20th August 2019.
It stated this in a circular to all insurance and reinsurance companies with the title, ‘Re: Minimum paid up share capital policy for insurance companies and reinsurance companies in Nigeria,’ which was signed by the Director, Policy & Regulation Directorate, NAICOM, Pius Agboola, recently.
The commission stated that the minimum paid up capital would be through any or combination of its stated conditions.
It explained that this included the existing paid up share capital; cash payment for new shares issued; retained earning-capitalisation of undistributed profits; payment in kind (other than by way of cash) for new shares issued such as properties, and T-bills. Others are shares, and bonds which must be converted to cash not later than three months to the deadline for recapitalisation and share premium.
NAICOM added that the companies would also be allowed to use their escrow account with the Central Bank of Nigeria, Shareholders funds, statutory deposit, and mergers and acquisition.
Speaking with our correspondent, the acting Commissioner for Insurance, Mr Sunday Thomas, said that the insurance companies had submitted their recapitalisation plans and the commission was reviewing them.
While he noted that some of the plans were in order, he said others were not.
Though he did not mention names, Thomas noted that the capital constituents of some companies were not in accordance with the commission’s requirements.
He said, “We will reply all the companies that have submitted their plans, and those that did not seem to understand what the requirements are, we will write them and make recommendations to them on what they should do.”
In a circular released in June by NAICOM to its regulated entities, life insurance companies’ capital was raised from N2bn to N8bn, general companies’ got a raise from N3bn to N10bn, while composite insurance companies’ capital was raised from N5bn to N18bn.
The regulator also increased the capital of reinsurance companies from N10bn to N20bn.
NAICOM stated that the insurance firms’ paid-up capital would be their new capital base.
NAICOM stated that the commencement date for the circular was May 20, 2019, while the deadline was fixed at June 30, 2020.