Yemisi Izuora
The National Insurance Commission (NAICOM) has split the industry recapitalization process into two, extending the recapitalization deadline to September, 2021.
The segmentation was contained in a circular issued by the commission Wednesday, June 3 with title “Segmentation of minimum paid up share capital requirement for insurance companies in Nigerian,” referenced: NAICOM/DPR/CIR/25-04/2020, signed by the Director Policy &Regulation, Mr. Pius Agboola, for the Commissioner for Insurance, Mr Sunday Thomas.
According to the circular, insurance companies in the first phase are required to pay 50 per cent of their minimum paid up capital by 31st December 2020 and the remaining 50 per cent in the second phase by 30th September 2021.
Reinsurance firms are also expected in the first phase to pay 60% of their minimum paid up capital and 40 per cent in the second phase.
The circular states, “the incidences of COVID-19 pandemic has made it difficult to proceed with the 31st December, 2020 recapitalization deadline. A review of the recapitalization deadline therefore became imperative in order to mitigate likely negative consequences of the pandemic on the exercise
“The Commission hereby extend and segment the recapitalization process into two phases as follows: 50 per cent minimum paid up capital for insurance and 60 per cent for reinsurance shall be met by 31st December, 2020; insurance companies are required to fully comply with the approved minimum paid up share capital not later than 30th September, 2021.”
The commission also urged insurers to comply fully with the required minimum paid up capital at the end of the recapitalization exercise on 30th September, 2021.
“Any insurance company that fails to satisfy the required minimum paid up capital by the end of 31st December, 2020 may be restricted on the scope of businesses they will transact” NAICOM warns.
It would be recalled that the commission had issued circulars referenced NAICOM/DPR/CIR/25/2019 dated May 20, 2019 which introduced the new capital requirement for insurance companies in Nigeria and NAICOM/DPR/CIR/25-03/2019 dated December 30, 2019 which extended the deadline for recapitalization