With recent conclusion of recapitalisation exercise in the insurance industry, NAICOM ‘s appointment of receivers and liquidators for the failed insurance firms has generated court actions against possible liquidation, writes Ebere Nwoji.
The present leadership at the National Insurance Commission (NAICOM), will for ever be remembered for its determination to conduct a fair and conclusive recapitalisation exercise in the Nigerian insurance industry after two decades of several inconclusive recapitalisation attempts.
Indeed, before the present commissioner for insurance, Mr Olusegun Ayo Omosehin’s regime in NAICOM, his predecessors namely Mohammed Kari and Sunday Thomas had experimented on several models of recapitalisation but all ended inconclusively because of oppositions from some owners of insurance firms who could not raise the new capital within the specified time.
But with Nigerian Insurance Industry Reform Act’s (NIIRA) recommendation of new capital base for the sector, Omosehin, girded his loin to ensure that the recommendation was carried out to the letter.
NAICOM’s Guidelines
In September 2025, the commission released a standard and explicit recapitalisation guidelines stating a 12-month period for all insurance firms to raise the new capital. According to Omosehin, the objectives of the guideline include to strengthen the capacity of insurance and reinsurance companies in Nigeria, to give effect to Part IV and other relevant sections of NIIRA 2025.
This guidelines aim to provide guidance and clarity on minimum capital requirement (MCR); set the timelines for the implementation of MCR; align capital requirements with risk exposure and best practices; provide guidance on admissible and inadmissible assets and liabilities and ensure seamless consolidation and transition to new capital regime.
Omosehin in doing this was careful to see that what made the previous exercises end inconclusively did not rear its head again .
But despite these efforts and the guidelines, some companies which could not meet the recapitalisation deadline have headed to court while some are now struggling to raise their capital one month after the expiration of the deadline. Some who obviously have not been obeying the regulator’s stated rules have equally gone to court in their usual manner of rendering every recapitalisation initiative inconclusive.This is despite NAICOM’s several warnings on the fact that there would be no extension of the deadline.
This has raised the question on what the companies have been doing in the past twelve months that they have suddenly woken up to start raising the new capital.
Although there are some of these failed companies whose present situation has attracted public sympathy because of their past records, yet there are some that obviously needed to be cleared from the system so that there will be peace and public trust in the system because their continued existence is causing dent on the image of the entire insurance sector.
Industry Analysts’ View
The situation, according to industry analysts, has positioned the regulator at crossroads or in a state of dilemma between allowing these companies who have woken up now to look for funds to scale through the recapitalisation and remain in business and going ahead to liquidate the companies to maintain its integrity .
According to the analysts, if the commission allows the companies to raise their capital now and remain in business, it would have secured the future of the companies, especially the companies that have over the years been playing according to rules, saved their workers from job loss and guard against other consequences it would have had on the economy.
On the other hand, the analysts said this would set bad example in the industry for future recapitalisation as most operators would not take the commission seriously.
According to them, if this happens, despite guidelines and deadline, operators would in future recapitalisation initiatives choose to ignore the commission and it’s set guidelines and deadlines and choose to meet the capital requirement at their own convenient time. According to them some deviant operators may even choose not to recapitalise but continue to transact business.
Operators’ views
Some operators who spoke to THISDAY on the condition of anonymity, said the situation was a big challenge to the regulator and calls for carefulness on the part of NAICOM to strike a balance between maintaining its present position of having concluded the recapitalisation and liquidate the failed companies and looking at the faces of companies like Universal Insurance and Royal Exchange Prudential insurance which have been compliant with the operating rules over the years. They however cautioned that this would make the commission lose its integrity and respect among the operators.
Before the enactment of NIIRA which ensured recapitalisation, the insurance sector way back in the years of the late Chief Oladipo Bailey as the commissioner for insurance, had experienced different cycles of failed recapitalisation attempts.
In 1997 the late Chief Bailey as the insurance commissioner first attempted to raise the minimum operating capital of the industry from N20 million to N500 million .This ended in multiple court cases by opposing parties.
Ten years after precisely in 2007, the then commissioner for insurance Mr Fola Daniel in his gentle nature and wisdom successfully raised the capital base of the operators to N2 billion minimum for life operators, N3 billion for nonlife operators, N5 billion for composite firms and N10 billion for reinsurers.This was the last conclusive recapitalisation exercise carried out in the industry before the present NIIRA driven initiative .
Not that other commissioners did not make attempt, they did but all were opposed in the law court.
For instance, between 2018 and 2019, Kari introduced the risk based capital increase but it could not succeed. Between 2020 and 2021, Sunday Thomas introduced the minimum share capital model but this again was stalled by court injunctions .
For each phase,the opposition parties always pose reasons for their court action and often have their ways thereby leaving the regulator helpless.
Looking at the just concluded recapitalisation, about six companies in the race could not make the list prompting NAICOM to issue liquidation order against them.
Failed insurance companies
One of the major companies that was unable to meet the deadline is Universal Insurance Plc, whose failure to make the recapitalisation list was a big surprise to the public. Others are; NICON Insurance Limited, Nigerian Reinsurance, Staco Assurance, Roya Exchange Prudential and the Federal Government owned Nigeria Agricultural Insurance Corporation (NAIC).
After the recapitalisation deadline, the commission went straight to determine the fate of the non recapitalised companies by revoking their licenses and appointing liquidators for them .
For instance, the commission revoked the operating licence of Universal Insurance on August 14, 2026, two weeks after the deadline after it failed to meet the N15 billion minimum capital requirement for general business underwriters. A lot of stories surrounded Universal Insurance failure to recapitalise. while a version of the story said it was into serious merger talks with Great Nigeria Insurance plc until the last minute when Great Nigeria insurance embraced a new investor. Another version of the story alleged that Universal Insurance presented a fake merger agreement letter with Great Nigeria Insurance to the regulator, a situation which made Great Nigeria Insurance to threaten court action against Universal Insurance.
THISDAY gathered that the development has completely wiped out the company’s equity value, leading to immediate suspension of its shares on the Nigerian Exchange (NGX), and appointment of receiver/provisional liquidators.
Legal Action Against NAICOM:
But the company has not given up, as it has initiated legal challenge at the Federal High Court in Lagos against NAICOM. Nigeria Reinsurance Corporation and its sister company NICON Insurance Limited have their operating licences revoked by NAICOM following failure to meet the statutory N35 billion threshold for reinsurers under NIIRA 2025. NAICOM froze its bank accounts and appointed liquidators, both companies are currently in court against NAICOM challenging the commission on the rationality of fees it charged for the exercise.
While some of these companies are in court, some are currently making efforts to raise the capital where as the commission from the beginning of the exercise insisted that there should be no extension of the deadline.
Commissioner for insurance:
This situation boils down to what Omosehin said at the beginning of the exercise where he urged companies, who want to merge to start on time to smoothen their merger talks.
He stated that the reason recapitalisation in the insurance industry has always been inconclusive is because operators were often deceived by their investors who keep on promising them of injecting funds into their companies until at the last count.
With this situation, all eyes are on NAICOM on the fate of these failed companies.But industry analysts have blamed the commission for having not taken over these companies as it did with African Alliance before the recapitalisation deadline.
The analysts said had NAICOM done this, it would have saved the souls of some of these companies and retain their work force and save policy holders and image of the insurance industry.
With the demise of these companies,the policy holders have been thrown into confusion as in the event of claims the question will be to whom do they go for compensation.
This also spells the need for NAICOM to speedy up action on the functionality of the Insurance Policy Holders’ Protection Funds (IPPF), whose committee it inaugurated recently.