The National Insurance Commission (NAICOM), has said that the recapitalisation policy for Nigeria’s insurance sector will enhance the emergence of stronger underwriting firms.
Mr Sunday Thomas, Deputy Commissioner for Insurance (Technical), NAICOM, reported at a seminar organised by NAICOM for newsmen on Saturday in Ijebu-Ode, Ogun State.
He said that the exercise would change the negative image of the sector and increase its contributions to the country’s Gross Domestic Product (GDP).
Thomas said: “NAICOM wants to ensure that stronger underwriting firms emerge in the country.
“Viable and solid companies that are able to support government in its policies and which are able to create employment and add other value to the economy must emerge in the insurance sector.”
He reiterated that NAICOM would work vigorously to pursue the recapitalisation exercise to have a sector filled with stronger, more visible and solid operators capable of paying claims.
The News Agency of Nigeria (NAN) reports that the recapitalisation policy is a form of corporate reorganisation which needs substantial changes to a company’s capital structure.
According to the NAICOM chief, it is one of the strategies used to improve financial stability of operating firms.
“On May 20, NAICOM released a new circular titled Minimum Paid-up Share Capital Policy for Insurance and Reinsurance Companies in Nigeria.
“By the provisions of this circular, all insurance companies that provide life insurance services are required to increase their minimum paid-up share capital from N2 billion to N8 billion.
“Companies that provide general insurance are required to increase their minimum paid-up share capital from N3 billion to N10 billion.
“In addition, companies that provide composite insurance and reinsurance are required to increase their minimum paid-up share capital from N5 billion and N10 billion to N18 billion and N20 billion respectively,’’ he said.
Thomas said that the issue of recapitalisation had always been viewed as a policy regulation in which some practitioners did not see any inherent benefit.
He said, however, that the recapitalisation was critical, particularly at the present level of economic growth.
“Recapitalisation is one of the strategies used to improve financial stability of operating firms,” the NAICOM chief said.