…as NAICOM releases guidelines
The National Insurance Commission (NAICOM) has released the guidelines for the Minimum Capital Requirement (MCR) of insurance and reinsurance companies, directing operators to submit their current compliance status on 2024 Audited Financial Statements and Second Quarter Returns as at 30th June 2025 in line with approved template.
NAICOM in a circular dated 8th September 2025 themed: ‘Guidelines on Minimum Capital Requirement for Insurance and Reinsurance Companies’ signed by Oluwatoyin Charles, director, Supervision Directorate for the Commissioner for Insurance accessed by Business Day also released the template on composition of the MCR as provided in the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
The Commission in the directive, said, “An insurer shall determine its MCR status as at 2024 Audited Financial Statements and 2nd Quarter Returns as at 30th June 2025 using the Template for the computation of the MCR.”
Other datelines in the circular include submission of recapitalization plan on or before 30th September 2025; monthly progress reports to come 10 working days after month-end; capital verification exercises shall commence from 1st November 2025 upon notification of compliance with MCR and shall be concluded not later than 30th June 2026; All directives arising from capital verification exercise shall be complied with not later than 30th June 2026; while submission of evidence of payment of Statutory Deposit to CBN shall be on or before 30th May 2026; while final compliance deadline being 12 months from the effective date of NIIRA 2025 shall be 30th July 2026.
The guidelines according to the Commission communicates its supervisory expectations that will ensure effective and seamless implementation of the MCR by insurance and reinsurance companies in Nigeria.
On what constitute the MCR, the Commission said it shall be Admissible Assets less Admissible Liabilities.
“The MCR as prescribed in Section 15(5) of the NIIRA 2025 is the excess of admissible assets over liabilities, less the amount of own shares held by the insurer.”
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The admissible assets according to NAICOM shall consist of: Cash and Bank balances, Tenured Deposits with Financial Institutions; Government Bonds, Treasury Bills, Corporate Bonds (Quoted), Commercial Papers, Quoted Equities, Loans to Policyholders, Reinsurance Assets, Premium Receivables, Investment Properties (at lower of cost or fair value and not more than 25 percent of MCR) and Statutory Deposits, among others.
While the admissible liabilities shall include:
Insurance Contract Liabilities, Reinsurance Contract Liabilities, Investment Contract Liabilities, Trade Payables, Borrowings, Lease Liabilities, Provisions, Other Payable Accruals, Fixed Income Liabilities, Current Income Tax Liabilities, Deferred Tax Liabilities, among others.
NAICOM said part of the recapitalisation plan to be submitted are before end of this month include, Board resolution on how to comply with the relevant provisions of this guidelines and extant insurance laws; Capital status of the insurer as at 2024 Audited Financial Statements and 2nd Quarter Returns as at 30th June 2025, based on the requirements of this Guidelines; Short fall in the statutory deposit with CBN; Detailed Action Plan on the amount(s) and source(s) of capital injection(s) with timelines and deliverables.
Others includes Insurer intending to seek funds from the Capital Markets are required to submit their plan of action on a file-and-use basis; Insurer that intends to merge or acquire another shall submit their proposal after which they must comply with the relevant provisions of this Guidelines and extant insurance laws; while Portfolio Transfer and Run-Off Plan where a composite company that chose to discontinue a particular category of insurance business must also be submitted.
The MCR as prescribed in the NIIRA 2025 is the higher of: Life Insurance N10 billion or Risk based Capital; Non-Life Insurance N15 billion or Risks Based Capital; and Reinsurance N35 billion or Risk Based Capital.
