Many indigenous underwriting firms have been taken over by foreign investors since the last recapitalisation that took place in the insurance sector , investigation has shown .
The National Insurance Commission confirmed that a number of local players in the insurance sector preferred being acquired by foreign entities to becoming stronger through merging with other local operators .
According to NAICOM , some of the foreign investors that have taken over local insurance companies are Prudential Africa , Axa Mansard , Allianz Group and Old Mutual .
One of foreign operators is InsuResilience Investment Fund , which recently injected N 3 .6 bn and acquired 39 .25 per cent stake in Royal Exchange General Insurance Company , a subsidiary of Royal Exchange Plc, a finance and insurance services group .
It was learnt that the acquisition of 39 .25 per cent in the local firm was part of its recapitalisation moves to meet the recapitalisation requirement handed down by industry regulator , NAICOM .
The Director , Policy & Regulation Directorate , NAICOM , Pius Agboola , said that investors were taking position in the country because of the potential .
He said, “ Considering the high population and developing industrial and commercial sectors , the potential for insurance business is very high. The high potential of insurance business is also evident from foreign investors .”
Agboola noted that while some of the companies that borrowed money after the last recapitalisation were doing well , most of them had been bought over by foreign investors .
According to him , the commission had introduced different recapitalisation initiatives in years past to encourage voluntary merger , but many of the companies still preferred to borrow money rather than merge.
NAICOM said merger had the potential to lift the insurance sector , adding that some of the insurance firms that took the merger route during the 2007 recapitalisation exercise were still doing very well in the industry .
During the 2007 exercise , four companies merged to form Custodian ; four merged into Veritas Kapital ; two merged to become LASACO Assurance ; two firms merged to become Linkage Assurance .
Similarly , three firms merged to become NEM Insurance; three companies merged to become Regency ; three merged to become Sterling; two merged to become Consolidated Hallmark while another two merged into African Alliance .
Under the new dispensation , the commission would not allow the companies to borrow money to recapitalise , Agboola said .
He said, “ If any of them wants to bring in money , they must become owners and manage the company together , not give them money and go and sit down and expect them to pay back . When they are owners , they will have directors; they know how the company is being run . If the person at the helms of affair is not doing well , they will fire him and employ another person. ”
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In a circular released in June 2019 by NAICOM to its regulated entities , life insurance companies ’ capital was raised from N 2 bn to N 8 bn ; general companies ’ got a raise from N 3 bn to N 10 bn ; while composite insurance companies ’ capital was raised from N 5bn to N 18 bn .
The regulator also increased the capital of reinsurance companies from N 10 bn to N 20 bn .
NAICOM stated that the insurance firms’ paid -up capital would be their new capital base.
It said the inaugural date for the circular was May 20 , 2019 while the deadline was fixed for June 30 , 2020 .
The commission also instructed the companies to submit their recapitalisation plan on or before August 20 , 2019 .