Recapitalisation: Investor propose 10 years roadmap for insurers
Faces of those who attended the 3rd Annual National Conference of the National Association of Insurance and Pension Correspondents (NAIPCO) held at Oriental Hotel, Lekki, Lagos on Thursday, August 9, 2018.
An investor has proposed a 10-year recapitalisation roadmap that would enable life insurance companies raise their capital to N20 billion; general operators, N30 billion and composite firms, N50 billion.
The Managing Director Lancelot Ventures Limited, Adebayo Adeleke, who is also a shareholder in many insurance firms, stated this at the 3rd National Conference of the National Association of Insurance and Pension Correspondents (NAIPCO) in Lagos.
He added that 3-tier rcapitalisation roadmap should be clearly thought out and spanned over 10 years.
According to him, the first phase of recapitalisation should be within a period of 18 months and Life Underwriters should raise their capital from N2 billion to N4 billion; General Business Operators, move from N3 billion to N5 billion.
Continuing, he said in the second phase, which should be three years after the first exercise, Life operators should move their capital to N8billion; Non-life, N10 billion and Composite, N18 billion.
He maintained that in the third phase, which should be five years after the second recapitalisation exercise, Life Underwriters should beef-up their capital to N20 billion, General Business underwriters, N30 billion and Composite firms, N50 billion.
He called on the National Insurance Commission (NAICOM) to evolve templates and incentives for mergers and acquisitions to enable strong firms absolve weak ones, as against waiting for firms to be bankrupt, and then take over the management.
In a similar vein, Past President, Chartered Insurance Institute of Nigeria (CIIN), Bala Zakariya’u, has charged regulators in the financial services industry to create the enabling environment for mega companies to be established through mergers and acquisitions, adding that “such mega financial institutions are to be tasked with higher capital and solvency, sophisticated information technology infrastructure, best in class human resources and strong brand presence.”
Zakariya’u further said the mega institutions should also have better all-round capacities and connections, as well as cognate strategies to deepen market penetration and enhance finance inclusion.
While fears may be expressed that creating mega institutions may lead to the emergence of ‘companies which may be too big to fail, which, is every regulator’s nightmare,’ he believes ‘this ought to be a preferred nightmare, than what we currently have by default: companies which are too small to succeed.’
