The National Insurance Commission (NAICOM) has extended full compliance deadline for the ongoing recapitalisation exercise in the insurance industry to September 30, 2021, with first phase to end December 31, 2020.
The commission said on Wednesday that insurance companies are expected to recapitalise 50 percent of the paid-up share capital by end of 2020, and reinsurance companies 60 percent, while the remaining 50 percent and 40 percent, respectively, will be completed by end of September 2021.
According to the commission, any insurance or reinsurance company that fails to meet the first phase of the capitalisation by end of 2020 may be restricted on the scope of business it will transact.
“The incidence of COVID-19 pandemic has made it difficult to proceed with the 31st December, 2020 recapitalisation deadline earlier slated,” NAICOM said in a revised circular sent to insurance and reinsurance companies on Wednesday.
In the circular titled ‘Segmentation of minimum paid-up share capital requirement for Insurance and Reinsurance Companies’ and signed by Pius Agbola, director, policy and regulation, NAICOM said a review of the recapitalisation deadline, therefore, became imperative in order to mitigate likely negative consequences of the pandemic on the exercise.
“The commission hereby extends and segments the recapitalisation process into two phases as follows: 50 percent of the minimum paid-up capital for insurance and 60 percent for reinsurance shall be met by 31 December, 2020. Insurance companies are required to fully comply with approved minimum paid-up capital not later than 30th September, 2021,” NAICOM said.
The segmentation means life companies operating currently with N2 billion will increase to N4 billion by December 31, 2020 as first phase, and to N8 billion by September 30, 2021; general business companies operating currently with N3 billion will increase to N5 billion by December 31, 2020 as first phase, and to N10 billion by September 30, 2021.
Furthermore, composite business companies operating currently with N5 billion will increase to N9 billion by December 31, 2020 and to N18 billion by September 30, 2021, and reinsurance companies operating currently with N10 billion will increase to N12 billion by December 31, 2020 in the first phase, and to N20 billion by September 30, 2021.
