Recapitalisation is to protect Shareholders’ Investment – NAICOM
The National Insurance Commission (NAICOM) said the ongoing recapitalization in insurance industry in Nigeria is not to kill the industry but to protect shareholders’ investment.
The Director, Policy & Regulation Directorate who is also the Chairman, Recapitalisation and Implementation Committee, NAICOM, Mr. Agboola Pius, who represented the Acting Commissioner for Insurance, Mr. Olorundare Sunday Thomas, said this at the interactive session organized by NAICOM for various Shareholders Associations with interest in insurance Companies today in Lagos.
Agboola said the interactive session is part of the commission’s ongoing engagements and sensitization programmes, with various stakeholders in insurance sector in Nigeria, on the way forward regarding the ongoing recapitalization exercise.
He said the interactive session is to give the shareholders the right information that will help them in making appropriate decision as regards their investment in the industry, adding that all stakeholders are important to them.
“For us at NAICOM, every stakeholder in the industry is important no matter how small or minute is your investment in the industry,” he said.
He said because of low retention capacity of some insurance companies, the primary objective of the ongoing recapitalization is to ensure that insurance companies are properly and better managed as well as to increase their retention capacity to retain more risks and more premium within the industry.
While giving a recap on the journey so far, he said the Commission has issued circular to all the insurance and reinsurance companies on what they are expected to do including submission of their recapitalization plans.
Agboola said so far 44 insurance companies’ recapitalization plans have been approved, while plans for six companies are being reviewed, plans for two insurance companies were returned for resubmission and two insurance companies are yet to submit their plans.
He said insurance companies have been given various options in ensuring a successful recapitalistion.
Some of the options, according to him, include merger and acquisition, private placement, right issues, injection of more funds from retained earnings among others but warned insurance companies against borrowing to recapitalize.
He said in order to ensure the success of the recapitalization exercise; the commission has put several palliatives in place, adding that NAICOM is currently engaging the Federal Inland Revenue Service (FIRS), Security and Exchange Commission (SEC) Corporate Affairs Commission (CAC) Central Bank of Nigeria (CBN) to ensure reduction of recapitalization cost.
Agboola said NAICOM in demonstration of its commitment to the growth of insurance industry in Nigeria, emphasizes on market development to enable investors have value for their investment, adding that the Commission is working tireless to ensure the implementation of the enforcement of compulsory insurance; investment in Information and Technology (IT) infrastructure in the sector; Risk Based Supervision (RBS) and opening of more distribution channels.
He said the Commission is also committed to develop and deploy appropriate frame work to ensure improvement in insurance awareness, better corporate governance oversight, effective collaboration with relevant sectors, reduction in the incidence of fake insurance and effective monitoring to ensure prompt payment of claims.
Agboola who implored shareholders to be optimistic and concerned about the growth of the industry expressed the hope that this may be the last recapitalization in the industry.
He explained that all funds raise in the recapitalisation would be paid into an escrow account domiciled in the Central Bank of Nigeria (CBN), stressing that funds from companies that fail to recapitalised would be returned to investors.
Responding, National coordinator, Independent Shareholders Association of Nigeria (ISAN), Adedeji Adebisi, thanked NAICOM for organizing the interactive session to give audience to the shareholders, noting that NAICOM would have done this long ago even before embarking on the recapitalization exercise.
He said shareholders have lost a lot in the past and that NAICOM as regulator of the industry has done nothing, adding that they (shareholders) have not been given enough chance to make their inputs.
Adebisi who said that some insurance companies in the industry are trading below their capital, described the ongoing recapitalization as unnecessary interference in the internal management of insurance companies.
He said with the economic situation in the country and the poor return on investment in insurance industry in Nigeria, it will be difficult for shareholders to continue to invest their money in the industry.
The representative of Security and Exchange Commission (SEC), Head, Financial Guidance/Corporate Governance, Alhasan Suleiman, said regulation in any industry is to ensure checks and balance for the success of the industry so that all stakeholders can benefit from their investments.
He called on shareholders to see regulators as friends not as enemies, noting that they are aware that no company can grow without people investing in it.
Suleiman pledged the support of SEC to NAICOM to ensure the success of the ongoing recapitalization exercise even as he promised to protect the interest of local investors.
