Recapitalisation: N44.3bn capital impairment threatens African Alliance, others


As the National Insurance Commission (NAICOM) commences release of underwriters’ recapitalisation plans for public knowledge, indications have emerged that at least  nine firms require a minimum of N44.3billion to meet the new capital threshold to remain in business by July 2020.


Although details of some others are still sketchy, first leg findings by Newsfieldglobal revealed that those put together in this regard would require various amounts totaling N44.3billion to catch up with some of their fellow operators that have either met the requisite recapitalisation benchmark or surpassed it.


The struggling firms cut across life, general and composite segments.


According to the recapitalisation details, composite insurers are to raise their shareholders’ funds to N18 billion from N5 billion, general business to N10 billion from N3 billion, while life insurers will raise theirs to N8 billion from N2 billion. Reinsurance companies will increase theirs to N20 billion from N10 billion.


Those identified so far in the life segment are ARM Life and African Alliance.


The breakdown shows that out of the required N8 billion for their business, African Alliance needs a minimum of N2 billion to remain in business, as it currently has N6.0 billion in its kitty.


For ARM Life, it needs about N2.4 billion to push its current N5.6 billion to N8 billion.


Similarly, for composite operators, Lassaco Assurance would require about N9 billion or a little more to meet the N18 billion threshold as it currently has N8. 48 billion, while Mutual Benefits will also source for  N6.1 billion to beef up the N11.9 billion it currently holds.


Likewise, Cornerstone Insurance would require a total of N5.4 billion to remain in business, while AIICO Insurance needs just N1.3 billion to also stay afloat.


For the general business segment, Sovereign Trust Insurance and Consolidated Hallmark would need a combined sum of N7.4 billion as each of them currently has shareholders’ funds of N6. 3 billion.


Also in this league is Regency Alliance, as it will require N4. 6 billion to beef up its current shareholders’ fund of N5.4 billion to N10 billion.


Meanwhile, further findings revealed that except other unknown elements are introduced in course of the exercise, some of the firms are already comfortably prepared to move to the next level.



In this league and leading the table is Leadway Assurance, which has crossed the threshold with N29.9 billion, according to its 2018 financial result.


In the same vein, AXA Mansard, according to analysis of its 2019 first-half financial results, has also crossed the threshold, as it currently boasts of N22.5 billion shareholders’ funds.


Also in the comfort zone is Custodian Investment, which comprises Custodian & Allied and Custodian Life with shareholders funds of N19.1 billion, while Wapic Insurance and Wapic Life both have shareholders funds of N17.2 billion.


For companies in the general business segment, NEM Insurance has also crossed the threshold with shareholders funds of N13.9 billion while for lfe business segment, FBN Insurance has crossed the threshold with N10.7 billion, as well as Prudential Zenith Life with N8.5 billion.


Recall that NAICOM, last week, said out of the 47 insurers and two reinsurers that submitted thier recapitalisation plans, only one so far met the necessary requirements.


According to the Head, Commissioner for Insurance’ Directorate, Rasaaq ‘Salami, further to the circular issued by NAICOM on May 20, 2019 increasing the paid up share capital of Insurers and reinsurers in Nigeria and, the subsequent directives to companies to submit their recapitalization plans by August 20, 2019, “the commission hereby notifies all insurance stakeholders that it received plans of 47 insurers and two reinsurers.

He stated that in keeping with the recapitalisation roadmap, the commission had concluded review of the submissions and  communicated same to individual companies on their positions.


Details further revealed that 26 companies have been granted “No Objection” to proceed with their plans, while the plans of 17 companies were corrected and have been advised to resubmit their new plans using paid-up capital and not shareholders fund; four companies do not have the requisite 2018 financial statements and are thus, advised to review their plans of using IPO.


It also noted that one company has litigation issues and has been advised to resolve them as soon as possible to enable it progress; One company’s submission was noted to have met the necessary requirements while review of submissions from two companies is ongoing.



Besides, three companies are yet to submit their recapitalization plans.

He said NAICOM had resolved to adhere to the recapitalisation roadmap towards achieving its desired objectives in the best interest of all stakeholders.


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