Despite the impact of COVID-19 pandemic on the economy, the insurance industry attracted some investments that boosted its assets, investigation has shown.
Many of the underwriting firms started sourcing for foreign investors to bring in new capital since the National Insurance Commission ordered the firms to beef up their capital requirements in 2019.
Figures obtained from the Central Bank of Nigeria’s report on ‘Insurance sector (general and life) consolidated balance sheet’ revealed that the industry’s asset rose by N410bn from N1.41tn as of the end of third quarter of 2019 to N1.82tn as of the end of third quarter of 2020.
According to the CBN report, the figure which stood at N1.26tn as of the end of 2018 rose to N1.61tn as of the end of 2019.
The statistics further revealed that the assets rose to N1.52tn, N1.79tn and N1.82tn as of the end of first, second and third quarters of 2020 respectively.
NAICOM had mandated that 50 per cent of the minimum paid-up capital for insurance and 60 per cent for reinsurance must be met by 31 December 2020.
The regulatory body had stated that insurance companies that failed to satisfy the required minimum paid-up capital by December 31, 2020 would be restricted on the scope of business they could transact.
Life and general insurance companies were asked to shore up their existing minimum paid-up capital from N2bn and N3bn to N4bn and N5bn respectively by the end of December 2020, and meet the final minimum paid-up capital requirements of N8bn and N10bn respectively by the end of September 2021.
Composite companies and reinsurance firms were asked to shore up from existing minimum paid-up capital of N5bn and N10bn to N9bn and N12bn by end of December 2020 and to N18bn and N20bn respectively by the end of September 2021.
Some operators had urged NAICOM to waive the first phase of its segmented recapitalisation.
The underwriters also urged NAICOM to consider their challenges by amending some of the requirements in the recapitalisation directive.
The operators said they were more concerned about the aspect relating to attainment of certain thresholds by 31 December 2020, failing which the commission would restrict the scope of business insurance and reinsurance companies would transact.
According to them, the huge impact of COVID-19 on the financial services sector and the national economy at large, coupled with the situation that was worsened by losses from the nationwide #EndSARS protests in the later part of 2020 affected them.
However, as NAICOM’s directive remained, some displeased operators dragged the regulator to court, using some shareholders’ associations.
On December 9, 2020, the House of Representatives asked NAICOM to suspend the December 31, 2020 deadline set for operators in the insurance industry to recapitalise.
This led the commission to suspend the first phase of the recapitalisation, leaving the second phase scheduled to end by September 2021.
However, some underwriters had declared on their own that they met the requirements before the first phase of the recapitalisation was suspended.
The Managing Director/ Chief Executive Officer, SUNU Assurances Nigeria Plc, Samuel Ogbodu, said the company successfully completed the first phase of its recapitalisation plan by increasing its shareholders’ fund to N6.61bn in 2020 from N3.47bn in 2019.