Recapitalisation: Law Union & Rock May Consider Merger To Raise Capital
Chairman, Board of Directors, Law Union and Rock Insurance Plc, Mr. Remi Babalola, said the Board of the company, will soon convene an Extra-Ordinary Meeting (EOM) to consider options to be adopted in raising the company’s capital to meet the new capital requirements as directed by the National Insurance Commission (NAICOM).
Law Union & Rock Insurance capital as presently stands is N2.6 billion and as a General Insurance Company they need N7.4 billion to meet the N10 billion capital benchmark expected for general business underwriters by NAICOM.
NAICOM had increased the paid up share capital of insurance and reinsurance companies from N2 billion to N8billion for life insurance companies, N3 billion to N10 billion for general business underwriters, N18 billion for composite insurers and N20 billion for reinsurance companies with a one year timeline for compliance.
Mr. Babalola while speaking with the Revealerng.com on the company’s plans to meet the new capital regime as required by NAICOM, he said the company may consider merger with the “like-minded insurance companies in this regard,” adding that for now the company’s management would continue to engage the regulator on the issue just as he assured the shareholders of the Board’s commitment to ensure the survival of the company and the protection of their investments.
He said there was need for the insurers to continue to engage the regulator instead of fighting them for the good of the industry stating that the regulator’s action is not to kill the industry.
“We cannot fight the regulator but we will continue to engage them. Their aim is not to kill the industry,” Babalola said.
On the company’s performance during the year ended December 31, 2018, he said the company closed the year with a modest performance of over 117% increase in Net Benefits and Claims.
He said the company’s Gross Premium Written rose slightly by 6.79% from N4.252 billion achieved in 2017 to N4.541 billion.
The firm’s Net benefits and claims, according to him, increased astronomically by 117% to N1.6 billion from N0.737 billion posted in 2017 while underwriting profit dropped significantly by 46.05% to N0.638 from N1.18 billion posted in the preceding year.
Babalola said based on the phenomenal increase in Net Benefits and claims, the company’s Profit before Tax fell significantly by 55.4% to N0.490 billion from N1.099 billion recorded in 2017.
He said the company is one of the top claim paying insurance companies as claim paid per premium earned is one of the highest in the industry.
