AMINA HUSSAINI
As the liquidity squeeze continues to affect investible funds, insurers and reinsurers in the on-going recapitalisation exercise may now offer more than 30 percent of their existing and paid-up shareholding for private placement as the operators struggle to meet up with the first phase of the reform programme which ends December 31, 2020.
The insurance regulator, the National Insurance Commission (NAICOM) approved the window for the underwriting segment following appropriate clarification from relevant regulatory bodies.
The commission told the industry in a circular referenced NAICOM/DPR/CIR/25 – OS/2020 in which it also disclosed that it would commence the inspection of their books to verify the fresh capital injection for the first deadline at the 2020 year-end.
The commission had as part of its palliatives for the Covid-19 pandemic, granted the underwriters, an extended window which will close by 2021 for a program that initially was set to end by September 2020.
NAICOM approved the segmentation of the recapitalization process into two phases just as it extended the deadline of the exercise to September 30, 2021. The development requested insurance companies in phase, one to pay 50% of their minimum paid-up capital by 31st December 2020 and the remaining 50 percent by 30th September 2021; Reinsurers are expected to pay 60 percent in phase one and 40 percent by 30 September 2021.
According to the circular entitled, Re: Minimum Paid Up Share Capital Policy for Insurance and Reinsurance Companies in Nigeria, in furtherance to earlier circulars of May 20, 2019, July 23, 2019, and December 30, 2019, respectively on the subject matter, the Commission’s Director, Policy and Regulations, Pius Agboola explained that the minimum paid-up share capital shall also be through any or a combination of either, and existing paid-up share capital, cash payment for new shares and retained earnings which could be by the capitalisation of undistributed profits.
Agboola listed also payment in kind, such as properties, T-Bills, Shares, Bonds, share premium among others for new shares issued which must be converted to cash not later than three months to the recapitalisation
deadline.
According to him, the above components are to be converted to paid-up share capital in compliance with the recapitalisation exercise and applicable laws and regulations in Nigeria.
With the reform process gathering momentum, Agboola told the operators that they are now required to submit evidence of working to comply with the timeline of the programme.
“Submission of recapitalisation progress report shall now be monthly and the report shall be submitted not later than five working days after the end of each month, effective end of August”, he stated as he announced that the timeline and activities for the first phase of the recapitalisation commence from August 30 for submission of the monthly recapitalisation progress report.
The completion of the submitted reports would be after five working days after the end of each month, he stated
In the attached timeline for the programme, Agboola also explained that November 30, 2020, is the deadline for all mergers which verification starts September 14 for complying with the December 31, 2020 deadline of the first phase of the exercise.
Its reversal for a company will only be with the written approval of the commission.
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