Ebere Nwoji
Just 11 days to the insurance sector’s recapitalisation deadline slated for July 31 by National Insurance Commission (NAICOM), none of the existing 60 insurance and reinsurance firms has considered merger and acquisition as a survival option.
Yet no single company has been announced to have met the required capitalisation.
THISDAY findings reveal that the firms are still struggling to maintain their stand-alone status in the face of the exercise.
From what is happening among the operators, the operating firms prefer to woo investors in the NGX market rather than diluting their ownership structure.
Among those wooing investors in the NGX market are Guinea Insurance, which is seeking N5.8 billion through rights issue, Linkage Assurance, seeking N16.3 billion offer, Lasaco Assurance seeking to raise N18.47 billion, SUNU Assurance looking for N9.34 billion, Sovereign Trust looking for N5.02 billion, and Universal Insurance seeking to raise N15 billion from the NGX market.
Few days ago, capital market reports showed that, currently, eight insurance firms were in Nigerian Exchange Limited seeking to raise an estimated N78.66 billion through various capital raising options.
Aside the aforementioned firms, Regency Insurance Plc is also in the market for the same purpose. They are seeking funds through rights issue, public offers, private placement, special placements, and equity injections by existing shareholders.
While some of the firms have concluded their deals, others are at various stages of conclusion.
But recently, Commissioner for Insurance, Mr. Olusegun Omosehin, in response to THISDAY’s enquiries on the possibility of the firms making it on stand-alone basis through attraction of investors, said the problem with insurance operators was that they hardly wanted to consider merger option.
According to Omosehin, the problem they had in the previous exercises was that investors they were hoping on to raise capital always backed out at the last moment.
A staff of NAICOM said, on condition of anonymity, “Many companies have made significant progress, I don’t have merger details.”
From the Nigeria Insurers Association (NIA), the umbrella body of insurance underwriters, a staff said, also anonymously, because they were not authorised to speak to the public on the matter, “The recapitalisation process is still on, there is no merger information at our disposal.”
Generally, there is no concrete word on merger for now with regard to the recapitalisation process.
“I think many companies are trying to see if they can raise the money on their own through Rights Issue/Private Placement,” a source from the industry said.
The source added, “We are in the process of our verification exercise with NAICOM and we have been given Ernst & Young as our verification consultant by the regulator.
Recently Omosehin said he admired the progress already made by several operators in raising capital.
According to him, they have engaged investors, improved governance arrangements, and submitted to the verification processes required under the new framework.
He stated, “We commend this seriousness of purpose. However, we must be clear: the deadline is not symbolic; it is regulatory, and the industry must treat it with the urgency it deserves.
“NAICOM remains committed to a transparent, fair, and firm process. Our expectation is that every operator will demonstrate readiness, financial soundness, and full compliance.”