Mohammed Kari, NAICOM BOSS
BY NKECHI NAECHE—‘The National Insurance Commission (NAICOM) on Monday released new minimum paid-up share capital for insurance and reinsurance companies in Nigeria, which mandates Life Insurance companies to jack-up their capital from N2 billion to N8 billion; general business operators from N3 billion to N10 billion; composite business, N5 billion to N18 billion and reinsurance, N10 billion to N20 billion.
This is contained in a circular dated 20th May 2019, with circular with No. NAICOM/DPR/CIR/25/2019 signed by the Director, Policy And Regulation Directorate, NAICOM, Mr Pius Agboola.
The circular reads “In the exercise of the powers conferred on the commission by the enabling laws, the minimum paid up share capital requirement of insurance and reinsurance companies in Nigeria is hereby reviewed.
”It added that revised minimum paid-up capital in life, general, composite and Reinsurance from N2bn, N3bn, N5bn and N10bn to N8bn, N10bn, N18bn and N20bn respectively .
“In 2015/7, the insurance industry witness it’s last recaptilization and despite the astronomical increase in value of insured assets, consequent exposure to higher level of insured liabilities and operating cost of insurers, same capital continued to rule in the insurance industry.”
It further noted that the revised minimum paid-up capital shall apply to all insurance and reinsurance except Takaful operators and Micro-insurance companies.
“The new minimum paid-up share capital requirements shall take effect from the commencement date of this circular for new applications while existing insurance and reinsurance companies shall be required to fully comply not later than June 30, 2020.”
The provision in respect of requirement of statutory deposit as stipulated in part III, section 10 of the insurance Act 2003 shall apply on the effective date of commencement of this circular.
NAICOM had in July 2018 announced that the Tier Based Minimum Solvency Capital (TBMSC) exercise will fully take off on January 1, 2019, a deadline that some insurance operators, shareholders and other stakeholders resisted.
The decision of the regulator to later shift back the recapitalisation deadline date from January 1, 2019 to October 1, 2018, citing reinsurance treaties which is usually is done in November and December as the major reason for changing the deadline rocked the plan as some parties went to court to challenge it, hence, leading to the announcement by the Commission of the cancellation of the policy in October, 2018.