The National Insurance Commission says it plans to achieve 70 per cent local retention of the risks in the industry under its recapitalisation initiative.

While disclosing its strategic focus this year, the commission stated that the recapitalisation of insurance and reinsurance companies would strengthen the financial position of the companies; reduce risk of insolvency; encourage consolidation; and protect policyholders.

The commission stated that the recapitalisation would, “Enhance safety and soundness in the subsector; ensure 70 per cent increase in local retention; consolidation of operators; and encourage investments in the insurance sector.”

NAICOM said to realise this, it issued a recapitalisation directive and had engagement with relevant regulators in the financial sector on getting some palliatives for the regulated entitites.

To help the underwriters, he said the deadline for recapitalisation was extended to December, 31, 2020 from the initial June 30, 2020.

So far, six insurance companies had notified NAICOM of their plans to merge as part of their efforts to meet the regulator’s recapitalisation requirements.

The Director, Policy and Regulation at NAICOM, Pius Agboola, who spoke to our correspondent, said that some other insurance companies were also looking for partners to merge.

“Only six companies have indicated interest in mergers and acquisitions out of 44 companies reviewed,” he said.

Agboola noted that NAICOM had barred the regulated entities from borrowing money to meet their recapitalisation requirements.

According to him, enhanced capital base would enable the insurance companies to have more capacity to underwrite more risks.

He said, “If any of them wants to bring in money, they must become owners and manage the company together, not give them money and go and sit down and expect them to pay back.

“When they are owners, they will have directors; they know how the company is being run. If the person at the helm of affairs is not doing well, they will fire him and employ another person.”

It would be recalled that in 2019, NAICOM raised life insurance companies’ capital 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.