The National Insurance Commission (NAICOM) has said funds raised from investors in the ongoing recapitalisation would be refunded if the insurance operators failed to scale through.
The Director, Policy and Regulation Directorate, NAICOM, Pius Agboola, who is also the Chairman, Insurance industry Recapitalisation Committee, said this during an interactive sessions with shareholders’ association of quoted insurance companies in Lagos.
According to him, all funds raised in the recapitalisation exercise would be paid into an escrow account domiciled in the Central Bank of Nigeria (CBN), stressing that funds from companies that failed to recapitalise would be returned to investors.
He explained that the commission would ensure thorough oversight on how successful companies would invest the funds raised in the recapitalisation.
He noted that 44 underwriting firms have received regulatory approval to continue with the implementation of their recapitalisation plans.
NAICOM has reviewed the plans of six companies but was not satisfied with their reports and has asked them to make amend and re-submit their plans.
He noted that two insurers’ plans are currently undergoing review while two insurers are yet to submit their plans at all, a development he attributed to peculiar situations the erring companies are currently undergoing.
He, however, advised public shareholders present at the meeting to acquire more Insurance stocks in the ongoing exercise so that they can influence decisions in their respective companies.
While stating that 80 per cent of underwriting firms want to recapitalise through IPO and Rights Issue, he added that only a few insurers are considering mergers and acquisitions in an effort to scale through the hurdle.
The recapitalisation exercise, according to him, was meant to increase the risk capacity of local insurers so that they can retain more risks in the local market, thereby, increasing the contribution of the insurance industry to the nation’s economy.
Agboola informed the shareholders that the exercise would allow investors to get values and good returns on their investments.
NAICOM had earlier ordered insurance companies with a composite license to upgrade their capital base from N5 billion to N18 billion to continue to underwrite life and non-life insurance businesses in the country.