James Emejo in Abuja and Ebere Nwoji in Lagos
National Insurance Commission (NAICOM) has extended the deadline issued to insurance companies to raise their minimum paid-up capital to September 2021.
The recapitalisation deadline had earlier been fixed for December 31, 2020, which became not feasible following the economic disruptions caused by COVID-19.
Insurers now have up to September 30, 2021, to fully recapitalise in a two-phased plan.
The commission noted that the pandemic had made it difficult to proceed with the December 31, 2020 recapitalisation deadline, adding that a review of the recapitalisation timeline has become imperative in order to mitigate likely negative consequences of COVID-19 on the exercise.
NAICOM, in a circular issued yesterday and signed by the Director, Policy and Regulation, Mr. Pius Agboola, extended and segmented the recapitalisation process into two phases.
Insurance companies are requested to meet 50 per cent of their minimum paid-up capital for insurance and fully comply with the remaining 50 per cent approved minimum paid-up capital not later than September 30, 2021.
The implication is that instead of insurance and reinsurance firms compulsorily meeting the new capital requirement by December 31, 2020, as stated earlier, insurance firms are now required to provide 50 per cent of the required capital by December 31, while balancing the remaining 50 per cent by September 30, 2021.
Reinsurance firms are by the new requirement mandated to provide 60 per cent of the new capital by December 2020 and make up the remaining 40 per cent by September 30, 2021.
The commission warned that insurance companies that failed to satisfy the required recapitalisation thresholds by the December 31 deadline may be restricted on the scope of business to transact.
According to the capital segmentation, companies offering life assurance are expected to beef up their minimum paid-up capital to N4 billion in the first phase (December 31) and N8 billion by September 2021.
General insurance firms are required to raise their capital to N5 billion and N10 billion by December and September respectively, while reinsurance firms are mandated to recapitalise to the tune of N12 billion and N20 billion by December and September respectively.
Companies engaging in the composite insurance business are to beef up capital to N9 billion and N18 billion by the stipulated timelines.