Matthew Otoijagha
Shareholders of some Insurance companies want the National Insurance Commission (NAICOM) to review its recapitalization directive issued to the insurers, saying that the June 2020 deadline did not seem feasible. They made the submission while speaking with Newsmen in Lagos.
Mr. Shehu Mikail, the National President, Constance Shareholders, Association of Nigeria, explained that there was a need for an extension of the June 2020 deadline by NAICOM, as it did not seem feasible due to the present economic challenges.
Mikail said that once the economy improved, the directive could be implemented by the end of 2020. He said that while the initiative was laudable, there could be problems with implementation, as the present time frame and procedure could affect the growth of the insurance companies.
“Personally, I think it is good to have the recapitalization to enable us to have stronger insurance companies. But because the economy is not friendly at this period, most of the insurance companies would face this problem, as nobody is ready to invest their money,” he said.
Reacting to the option of merger or acquisition by the insurance companies, Mikail noted that the interest of the board of the insurers would determine the possibility of such partnership.
He said that mergers or acquisitions were good options in order to solidify the system, but were dependent on the terms, conditions and interest of the parties going into such arrangements. Mikail advised the insurance associations to intervene and liaise with the regulatory commission to consider an extension of the deadline.
“As a shareholder, I cannot take up any high risk to invest more money in the sector because the system is not conducive; it is better I maintain my status quo which I am still earning to have a backup for future purpose,” he said.
Also, the National Coordinator, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, complained that the time frame issued for the recapitalization was short. Okezie expressed disappointment that the regulator did not consider public opinion and complaints of the shareholders before taking the decision.
“For us, it is a fire brigade approach that the regulators (NAICOM) are adopting in the market, which is not helping the industry,” he said. Okezie, however, said it was good enough that the insurance companies had braced up to the challenge and were putting up plans to ensure that the deadline was met.
“Many of them are either approaching shareholders to plan for the recapitalization by increasing investment or their paid-up capital so that they could bring in core investors.
‘‘We are looking at money in bulk, and as it is now, the insurance cannot come as a way of Initial Public Offering (IPO) or Prospective Liability because nobody will buy among the existing shareholders, because it is a herculean task.