The National Insurance Commission (NAICOM) has extended deadlines for recapitalization of insurance companies in Nigeria even as it segmented the process meeting the target for them.
It revealed this via a circular labeled NAICOM/DPR/CIR/25-04/2020 and dated June 3.
According to NAICOM, the latest development as part of its efforts to cushion effects of Coronavirus pandemic on insurance companies in the country.
“The incidences of COVID-19 pandemic have made it difficult to proceed with the 31st December, 2020 recapitalisation deadline. A review of the capitalization deadline therefore became imperative in order to mitigate likely negative consequences of the pandemic on the exercise,” it explained in the circular signed by Pius Agboola, director of policy and regulation.
Consequently, NAICOM has segmented the recapitalization process into two phases, as it specified that 50 per cent of the minimum paid-up capital for Insurance and 60 per cent for Reinsurnace shall be met by 31st December, 2020.
“Insurance companies are required to fully comply with the approved minimum paid-up capital not later than 30th September, 2021,” it added.
This indicates that for Life insurance with existing minimum paid-up capital of N2 billion must raise the capital to N4 billion to meet the first phase deadline; and then to N8 billion by the second phase expiring on September 30th of 2021.
General insurance business class that runs on N3 billion capital must raise the capital to N5 billion by the end of 2020 and meet the final deadline of N10 billion by the end of Q3, 2021.
Also, Composite class of insurance business which currently runs on N5 billion minimum paid-up capital must jack up the capital base to N9 billion to fulfill the first phase demand of the segmentation by December 31st, 2020 and later increase the capital to N18 billion the end of September, 2020.
Lastly, the new policy expects reinsurance companies to move to N12 billion and N20 billion for the first and second phase of the segmentation exercise from their current paid-up capital of N10 billion.
Having laid rolled out the new normal procedure for the recapitalization exercise, NAICOM threatened that insurance companies that failed the required minimum paid-up capital by the end of the first phase on December 31st, 2020 may be restricted on the scope of businesses they will transact.
“Insurance Companies must fully comply with the required minimum paid-up capital at the end of the Recapitalization Exercise on 30th September, 2021.
“All other provisions in the previous Circulars are sustained. All Insurance Companies are advised to comply with the provisions of this circular. References to Insurance Company in this Circular include Reinsurance Company except where the difference is specifically stated,” the circular further read.