Twenty insurance companies have secured approval of their respective shareholders to proceed with their recapitalisation plans, LEADERSHIP can exclusively reveal.
The fund to be raised varies from one company to the other depending on their respective current financial worth.
While some require just N2billion to recapitalise, others need between N5billion and N10billion, espe-cially the composite ones, to get to the new capital benchmark.
The concerned insurers who are to raise a cumulative N100billion fresh capital to still be in existence post recapitalisation utilized their 2018 and 2019 annual general meetings (AGMs) as well as extra-ordinary general meetings (EGMs) to seek shareholders’ approval to proceed with their recapitalisa-tion plans.
The concerned insurance firms that have remarkably progressed in their recapitalisation exercise hav-ing secured shareholders and regulatory approvals include Linkage Assurance, Consolidated Hallmark Insurance (CHI) Plc, Mutual Benefits Assurance Plc, NEM Insurance, Leadway Assurance, Sunu Assur-ances, Anchor Insurance, Cornerstone Insurance and Wapic Insurance Plc.
Others are African Alliance Insurance, Law Union & Rock Insurance, FBNInsurance, AIICO Insurance, AXA Mansard Insurance, Old Mutual Assurance, Sovereign Trust Insurance (STI) Plc, Unitrust Insurance Company Limited, LASACO Assurance, Royal Exchange Plc, Great Nigeria Insurance (GNI) and Guinea Insurance Plc.
The National Insurance Commission (NAICOM) had earlier ordered insurance companies with compo-site license to upgrade their capital base from N5billion to N18billion.
Life insurance firms are required to increase their minimum capital requirement from N2billion to N8billion, amounting to 400 per cent increase in their capitalisation.
Similarly, General insurance companies are to raise their capital base to N10billion from N3billion, even as Reinsurance firms will now need N20billion capital base to operate Reinsurance business in the country.
They are expected to fully increase their capital to the new threshold by September 2021, while opera-tors are expected to realise 50 per cent of their capital by December 2020.
While some of the firms are considering mergers and acquisition, some are selling off their assets to make up the shortfall, even as others are going public to augment the existing capital.
In the next couple of weeks, investigation revealed that more insurance companies would be seeking permission of their shareholders to raise additional funds.
The shareholders of Wapic Insurance Plc have authorised the company to raise its authorised share capital to N18billion for its Life and General businesses from the current N8.5billion, meaning that the insurance firm is looking for about N9.5billion.
Similarly, the company, at its 61st annual general meeting, secured the approval of its shareholders to change the company’s name to Coronation Insurance Plc.
The new chairman of Wapic, Mutiu Sunmonu, who presided over the meeting, said the decision was aimed at enabling the company to reflect its independence, achieve set goals and in line with ongoing transformations in the nation’s insurance industry.
Consolidated Hallmark Insurance (CHI) is planning to raise its capital base from N6.1billion to N10billion by way of rights issue, hence, needing to raise additional N3.9billion.
As part of its recapitalisation exercise, its recent Rights Issue was fully taken up by its shareholders.
The company offered by way of Rights Issue 2,032,500,000 ordinary shares of 50 kobo each at 52 kobo per share.
The result of the offer which closed on June 8, 2020 and has just been approved by the Securities and Exchange Commission (SEC) shows a 100 per cent subscription.
Commenting on the successful outing, group managing director/CEO of CHI Plc, Mr Eddie Efekoha, ex-pressed delight at the good result despite the challenging period the offer was held.
LASACO Assurance Plc has approached and received its shareholders’ approval to raise additional N10billion capital.
The N10billion additional capital, when added to its current shareholders fund of about N8 billion, will allow the assurance company to hit N18 billion capital base benchmark as a composite insurer in the ongoing recapitalisation exercise.
Speaking on the recapitalisation plan of the company ahead of the December 2020 and September 2021 deadlines, at its 40th annual general meeting (AGM) in Lagos last week, the group managing di-rector, Mr Segun Balogun, assured shareholders that plans were in top gear to raise 50 per cent of the expected threshold of N18 billion, being a composite insurer, by October 2020.
He expressed optimism that LASACO will scale through the process successfully, thanking the share-holders and customers for their loyalty to LASACO brand, promising that the board will not let them down.
AIICO Insurance Plc has received shareholders’ approval to increase its Authorised Share Capital from N10 billion to N18 billion.
Similarly, the firm has commenced its recapitalisation process by the launch of its N3.5 billion rights is-sue.
The offer, which opened on Wednesday, September 2, 2020 is expected to end on Wednesday, Octo-ber 7, 2020.
To this effect, 4.35billion ordinary shares of fifty kobo each at 80kobo per share are being offered on the basis of five new ordinary shares for every 13 ordinary shares held as at the close of business on June 15, 2020.
SUNU Assurances Nigeria Plc is already exploring about N6billion Rights Issue to raise its capital base beyond the current N7billion authorised share capital, which will allow the insurer to underwrite all classes of general risk business.
The shareholders of Cornerstone Insurance Plc had at its recent AGM authorised its board to raise ad-ditional N10billion capital in a bid to meet the recapitlisation deadline.
The chairman, Sovereign Trust Insurance(STI) Plc, Mr Oluseun Ajayi, said the firm’s mandate to scale up capital base was already at an advance stage, stressing that the programme for capitalisation will take off with the issuance of rights to existing shareholders of the company. The company recently offered a total of 4.17billion ordinary shares to its esteemed shareholders.
On its part, Law Union and Rock Insurance Plc preferred outright acquisition, hence its shareholders, at its 51st annual general meeting held in Lagos a fortnight ago, accepted an offer of N1.23 per share for every 50kobo ordinary share they held from the new owner of the company, Verod Capital Manage-ment.
The board of Law Union and Rock secured the exit payment from its new investor in the quest to get full value for the investment of shareholders of the company Chairman, Law Union and Rock Insurance, Mr Remi Babalola, during the meeting, stated that the com-pany initially explored merger discussions with other insurance companies and communicated initial recapitalisation plans to NAICOM.
He however noted that they found that the shareholders of Law Union would not maximise share-holder value if such merger discussions crystallised.
Unitrust Insurance Company Limited, on its part, is considering merger with another local underwriting firm to fully recapitalise to N10billion new capital benchmark for a General Business insurer by Sep-tember 2021.
Speaking on the development, the managing director/CEO, Unitrust Insurance Company Limited, Mr John Ijerheime, said the firm currently has 67 per cent of the required capital, meaning that the insurer has more than enough to meet the first phase of the recapitalisation exercise slated for 31st of De-cember 2020.
The company is looking for over N3billion to hit the new capital benchmark.
Similarly, Linkage Assurance Plc has assured shareholders that despite the challenges posed by the impact of COVID-19, the company was on course to meeting the recapitalization requirements.
The company disclosed that it is concurrently exploring all available options, including Rights Issue, pri-vate placement, and internal capital sourcing, to raise the required funds.
Leadway Assurance, on the other hand, is optimistic of recapitalisation, saying it has enough financial buffer to meet the regulatory requirement.
The immediate past managing director of Leadway Assurance, Mr Oye Hassan-Odukale, while present-ing the company’s 2019 financial reports, stated that the insurer was in pole position to meet the new regulatory requirements for recapitalisation of the industry.
He added: “The prudence of the company’s management over the years has prepared us for the regu-lations of today where we are in a good position to comply with the minimum share capital require-ment without the exigency for any call on shareholders.
“Speaking on Royal Exchange General Insurance Company (REGIC) recapitalisation plans, its managing director/CEO, Mr Benjamin Agili, said in line with NAICOM’s directive for Phase 1 of the revised recapi-talisation guidelines, the insurer, with its approved 2019 financials, was poised to surpass the NAICOM directive and that plans were in top gear to ensure that REGIC is well capitalised.
NEM Insurance Pkc and Sunu Assurances Nigeria Plc were equally at different stages of their respec-tive recapitalisation exercise having gotten their respective shareholders permission to raise their capi-talisation.
Speaking on the recapitalisation plans of insurance industry generally, the chairman emeritus, Inde-pendent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, said in as much as he sub-scribed to improving the capacity of insurance industry, he feels the fixed capital base regime is not needed since insurance business is about pool and risk-sharing.
He said the ongoing recapitalisation exercise has seen entry of foreign outfits coming to buy up local insurance companies, hence, denying shareholders the needed returns on investments.
Similarly, a renowned shareholder, Nona Awo, felt managers of local insurers are mismanaging these outfits, which was why they were performing poorly and shareholders were not getting values for their money all these while, stating that most underwriting firms with foreign imprints are better man-aged.