National Insurance Commission has approved the segmentation of the recapitalisation process into two phases just as it extended the deadline of the exercise to September 30, 2021.
NAICOM circular conveying this said it was to mitigate the likely negative consequences of the Covid-19 pandemic on the ongoing recapitalization exercise.
The new development confines insurance companies in phase one to pay 50% of their minimum paid capital by 31st December2020 and the remaining 50% by 30th September 2021; whereas reinsurance firms are expected in this phase one to pay 60% of their minimum paid up capital by 31st December 2020 and 40% by 30th September 2021.
The approval was contained in a circular titled “Segmentation of minimum paid up share capital requirement for insurance companies in Nigeria” by the Director (policy & regulation), Mr Pius Agboola, for the Commissioner for Insurance, Mr Sunday Thomas, and addressed to all insurance and reinsurance companies.
The current circular is issued in reference to earlier circulars of May 20 2019 which introduced the new capital requirement for insurance companies in Nigeria, and another dated December 30, 2019 which extended the deadline for recapitalisation.
“The Commission hereby extend and segment the recapitalisation process into two phases as follows: 50% minimum paid up capital for insurance and 60% for reinsurance shall be met by 31st December, 2020; insurance companies are required to fully comply with the approved minimum paid up share capital not later than 30th September, 2021.”
The circular warned that insurance companies that failed to satisfy the required minimum paid up capital by the end of 31st December, 2020 may be restricted on the scope of businesses they will transact, urging insurance companies to comply fully with the required minimum paid capital at the end of the recapitalisation exercise on 30th September, 2021.
The Commission reiterated that all other provisions in the previous circulars are sustained, and advised companies to comply with the provisions of the circular.