Home Business NAICOM raises capital base for insurance sector by over 100%
NAICOM raises capital base for insurance sector by over 100%

NAICOM raises capital base for insurance sector by over 100%

0
0

The National Insurance Commission (NAICOM) has released the new capitalisation requirements for insurance firms in the country. Under the risk based capitalisation requirements, each cadre namely life, non life and composite insurance firms have had their capital base divided into three tiers.

Life insurance firms now have three captalization tiers. Tier one companies will be required to have N6 billion as capital. Tier two life insurance firms will be required to have N6 billion, while tier 3 firms will maintain the current requirements.

Non life insurance firms will now have three tiers. Tier one non life firms are mandated to have a capital base of N9 billion. Tier two firms in this segment are expected to have a capital base of N4.5 billion, while tier 3 firms will maintain the current capital base of N3 billion.

Insurance companies operating in the composite segment, that is all classes of insurance now have three tiers. Companies operating in the tier one will be required to have a capital base of N15 billion. Tier tow firms will need to have a capital base of N7.5 billion, while those in tier 3 will maintain the current capital base of N5 billion.

Deadline to meet the new requirements is January 2019.

Implications

The move could lead to several mergers and acquisitions in the industry. Raising capital through equity may be difficult for many of the firms, as they currently trade at N0.20 price floor.  Retail investors who have suffered a huge loss on their investments, will also be reluctant to partake in the exercise.

In anticipation of the new requirements, several insurance firms had initiated moves to raise capital.

LEAVE YOUR COMMENT

Your email address will not be published. Required fields are marked *

15 − 7 =

StartUpper of the Year Challenge

WP2Social Auto Publish Powered By : XYZScripts.com
Language Options »