…as component of capital remains unclear
Insurance companies in Nigeria have been given twelve calendar months ending July 2026 to comply with the new minimum capital requirement prescribed by the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
The directive confirmed in a circular dated August 13, 2025 sent to all Insurance and Reinsurance Companies in Nigeria says the recapitalisation exercise has commenced from July 31, 2025 date of enactment of the Act.
This is as confusion envelops the market, on what the compositions of the new minimum capital requirement are, which according to industry players remains unclear and very ambiguous.
Read also: Insurers await NAICOM pronouncement on composition of new capital
The circular signed by Usman Jankara, deputy commissioner for Insurance (Technical), NAICOM sighted by BusinessDay says- “Following the enactment of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 and assent of President Bola Ahmed Tinubu, GCFR on the 31st of July 2025, the Commission hereby notifies all insurance and reinsurance companies of the commencement of the recapitalisation exercise as prescribed by the NIIRA 2025.”
The Nigerian Insurance Industry Reform Act (NIIRA) 2025 which was recently approved by President Bola Ahmed Tinubu repeals and consolidates several outdated insurance laws into a single, modern legal framework.
The new Act — a landmark legislation that strengthens Nigeria’s financial sector and accelerate the nation’s march toward a $1 trillion economy – also provides for comprehensive regulation and supervision of all insurance and reinsurance businesses operating within Nigeria.
He said NIIRA 2025 introduces higher Minimum Capital Requirements (MCR) of N10 billion, N15 billion, N25 billion and N35 billion for life, non-life, composite and reinsurance companies respectively, and a shift to a Risk-Based Capital (RBC) framework for insurance and reinsurance companies in Nigeria.
“In line with the provisions of the Act, the new MCR takes effect from the date of Presidential assent, and all operators are required to comply fully within a twelve (12) month period from the effective date.”
Jankara said, in line with the provisions of the Act, the new MCR takes effect from the date of Presidential assent, that is 31st July, 2025.”
“A 12-month period has been provided for insurers and reinsurers to comply with the new MCR as well as the applicable RBC as may be determined. All insurers and reinsurers shall comply with the requirements on or before the 30th day of July 2026.”
The circular says, the Commission shall, in due course, issue comprehensive guidelines and circulars detailing the modalities for the recapitalisation exercise.
“These shall include, but not limited to: The composition of the MCR; Acceptable forms of capital; Procedures for capital verification; qualifying assets for MCR purposes and criteria such as title, ownership, and existence; and a standardised template for computation of MCR.
Read also: NAICOM innaugurates 11-member committee to oversee insurance recapitalisation
Meanwhile, section 15 (5) of NIRA says, the minimum capital requirement for existing companies before the Act will consist of -the excess of admissible assets over liabilities, less the number of own shares held by the firm; subordinated liabilities subject to approval by the Commission; and any other financial instrument as may be prescribed by the Commission
On treatment of asset, the circular further stated that- “For the avoidance of doubt, insurers and reinsurers are hereby informed that: Encumbered assets, assets without perfected title or ownership, and assets not in the full possession of an insurer/reinsurer shall be inadmissible for the purpose of meeting the MCR, while Assets that exceed prudential thresholds or do not meet the prescribed criteria shall also be deemed inadmissible.”
The circular also stated that, all assets for the purpose of the new MCR shall be subject to verification by the Commission or its appointed agents. “In addition, where, due to the nature or circumstances of an asset, the Commission deems it necessary to undertake further verification beyond the norm, the cost of such non-standard verification shall be borne by the concerned insurer or reinsurer.”
According to NAICOM in the circular, “Upon fulfilment of the new MCR, payment of the requisite fees and confirmation by the Commission, the successful insurance and reinsurance company shall be issued a new licence by the Commission.
Read also: What to expect as NAICOM implements Insurance Industry Reform Bill
“Any Company that fails to meet the prescribed MCR within the stipulated timeframe shall be subject to liquidation, merger, or any other regulatory resolution action as may be deemed appropriate by the Commission.”
The Commission however assures of its commitment to engage with relevant regulators such as SEC, CAC, NRS, etc and stakeholders with a view to securing, where possible, appropriate incentives and concessions that may ease compliance and reduce the cost of the exercise.
