In December 2024, the Nigerian Senate approved a revised capital requirement for insurance companies. The capital base for general insurance moved from N3 billion to N15 billion, life insurance from N2 billion to N10 billion, and composites now stand at N25 billion. On the surface, it appears like just another regulatory adjustment. In reality, this decision carries significant implications for the insurance industry and for the Nigerian economy at large.
One of the immediate effects is the ability of insurance companies to take on more risk. Historically, Nigerian insurers have struggled with capacity limitations, especially in high-value sectors like oil, gas, and aviation. Today, more than two-thirds of these kinds of risks are transferred abroad, largely because local companies lack the financial strength to underwrite them. With stronger capital positions, Nigerian insurers can now retain more of this business locally, keeping more premium income within the country rather than exporting it to foreign markets.
The capital increase also comes at a time when inflation, currency devaluation, and asset revaluation are forcing industries to recalibrate. In Lagos, for instance, a single prime property can cost as much as ₦3 billion. To put that in perspective, some insurance companies previously operated with a capital base that was worth less than the value of one such property. That disconnect made it increasingly clear that a stronger capital structure was not just advisable but necessary.
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It is fair to say that while these new levels are a step forward, they’re still modest when compared to global standards. At the current exchange rate, the N15 billion capital base for general insurance translates to about $10 million, a significant jump from the previous level, which was under $2 million, but still relatively small when measured against the size of risks companies are expected to cover. Nevertheless, it’s a move in the right direction. Progress often comes in stages.
Beyond the issue of risk retention, this increase will have ripple effects across the industry. With more capital, insurance companies can invest in better technology, expand their distribution channels, develop more tailored products, and attract and retain better talent. These improvements won’t just strengthen individual companies; they will help fortify the sector as a whole, making it more resilient and better equipped to serve the evolving needs of businesses and individuals in Nigeria.
A well-capitalised insurance sector also plays an important, though often understated, role in national development. As the country grapples with recurring challenges such as building collapses, industrial accidents, and infrastructure failures, insurers with sufficient financial buffers provide critical stability, allowing businesses and individuals to recover and rebuild with confidence. In many ways, strong insurers serve as quiet partners in nation-building, sharing the weight of risk that accompanies progress.
This attests to the kind of work being done at International Energy Insurance PLC. In practical terms, we have begun taking deliberate steps to meet the new capital requirements and position the company for long-term stability. At our recently concluded 44th Annual General Meeting in April 2025, shareholders endorsed a series of measures that directly support our recapitalisation efforts. Chief among these was the successful exit from the long-standing Daewoo Loan, achieved through a transfer of debt to Norrenberger Advisory Partners Limited, which, in exchange, now holds equity in the company. This critical move not only resolved a legacy financial obligation but also freed up our balance sheet to support future growth. In addition, shareholders approved the increase of IEI’s issued share capital and authorised the Board to pursue additional capital-raising initiatives through various instruments. These actions reflect our careful, forward-looking approach, balancing financial discipline with strategic flexibility as we work to strengthen our capital base and fully align with the regulatory minimum of ₦15 billion.
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We have approached these reforms with deliberate steps, reinforcing our capital position, strengthening governance, investing in modern technology, and enhancing technical capacity across multiple lines of business. By doing so, we are positioning ourselves to better serve the evolving needs of businesses and individuals while contributing to the sector’s long-term strength and the broader economic stability of Nigeria.
The road ahead remains one of continuous adaptation. This capital increase is not an end in itself but a foundation upon which the industry can build a more resilient, trusted, and globally competitive insurance sector. Over time, these reforms will allow Nigerian insurers to assume their rightful place as meaningful contributors to economic stability, local wealth retention, and the safeguarding of national assets. Uyi Osagie, chief financial officer, IEI Insurance
Uyi Osagie, chief financial officer, International Energy Insurance (IEI) Plc.
