The National Insurance Commission (NAICOM) yesterday revealed that six insurance firms have indicated interest to merge their businesses in order to scale its ongoing recapitalisation exercise
Speaking at an interactive session with shareholders on the ongoing exercise in Lagos yesterday, the Acting Commissioner for insurance, Mr. Sunday Thomas, who was represented by NAICOM’s Director, Policy and Regulation, Mr. Pius Agboola, also disclosed that a total of 44 insurance firms have so far submitted their recapitalisation plans and have secured the regulatory approval to proceed with the plans.
This was an improvement from the initial 26 firms whose plans were approved by the commission last month.
Addressing the shareholders on the development, Agboola, said though most of the 44 firms whose plans were approved, preferred capital raising through rights’ issue and initial public offering.
He, however, pointed out that the capital raising through private placement would have been their best option.
He said many of them may have to come back to the commission for a review of their plans, disclosing that two firms have already done so.
“A total of 44 out of 58 insurance firms have submitted their recapitalisation plans to us and we have approved them. Six recently submitted; we have reviewed and referred them back; two are under review, another two have not submitted mainly because of their current state of operation.
“So, we can say that 90 per cent have submitted and are okay, but there is possibility that they will come back for review of their plans because some them went for IPO two have come back for review. Private placement is a good way to go, also is mergers and acquisition, I have seen six firms that have opted for mergers, “ Agboola said.
He said there are some that may want to borrow money from the bank at 20 per cent interest rate. This, he, however said would not be the best option.
He said for those going into mergers and other means of fund raising, NAICOM has consulted with other regulators like Corporate Affairs Commission, SEC, NSE, CBN for a cost reduction in such process.
But in his address, a Director in the Supervision Department of the Securities and Exchange Commission, Sulaiman Alhassan, said though Nigeria was in need of foreign direct investment, SEC’s regulation would not allow more than 30 per cent investment into any of the insurance firms through private placement.
According to him, the policy was to give Nigerians opportunity to invest in the firms.
He said any investment through private placement by either local or foreign investors should not exceed 30 per cent, adding that such investment should be approved by the SEC.
He urged shareholders to utilise the current opportunity of low price of insurance stocks to invest in the sector.