NAICOM with­draws tier-based re­cap­i­tal­iza­tion ex­er­cise, re­struc­tures, cre­ates new di­rec­tors

Business a.m. - - NEWS - Ades­ola Afo­labi

THE NA TIONAL INSUR ANCE COM­MIS SION (NAICOM) has with­drawn and can­celled the cir­cu­lar on tier-based min­i­mum sol­vency cap­i­tal (TBMSC) pol­icy.

The com­mis­sion has also an­nounced a re­struc­tur­ing and the cre­ation of new di­rec­tors to ac­com­mo­date new di­rec­torates and state branch of­fices across the coun­try.

In a string on reg­u­la­tory state­ments made avail­able to busi­ness a.m. Fri­day, the com­mis­sion noted that the with­drawal and can­cel­la­tion of the TBMSC take ef­fect im­me­di­ately.

The TBMSC ini­tially ex­pected to kick of Jan­uary 1, 2019, was later resched­uled by the NAICOM to com­mence Oc­to­ber 1, 2018. How­ever, share­hold­ers through a court in­junc­tion sought to put a stop to the pol­icy.

The pol­icy which is based on a re­spec­tive risk clas­si­fi­ca­tion, is a three-tier ini­tia­tive which re­quires that for in­sur­ance for firms to be cat­e­go­rized in tier three which is the low­est, cur­rent min­i­mum base cap­i­tal of N2 bil­lion for life in­sur­ers, N3 bil­lion for non-life in­sur­ers, and N5 bil­lion for com­pos­ite in­sur­ers must be met while the min­i­mum N10 bil­lion for re-in­sur­ance com­pa­nies was left the same for all tiers.

For life, non-life and com­pos­ite re-in­sur­ers who wish to level up to tier two, they must have an ad­di­tional 50 per­cent of their re­spec­tive cur­rent cap­i­tal base lev­els.

To play in tier one, the re­cap­i­tal­i­sa­tion reg­u­la­tion re­quires life, non-life and com­pos­ite in­sur­ers to pos­sess an ad­di­tional 200 per­cent of their re­spec­tive cur­rent cap­i­tal base.

The cir­cu­lar signed for the com­mis­sioner for in­sur­ance by Ag­boola T Pius, NAICOM’s direc­tor for pol- icy and reg­u­la­tions ti­tled: “With­drawal of Cir­cu­lar on Tier Based Sol­vency Cap­i­tal Pol­icy for In­sur­ance Com­pa­nies in Nige­ria” and is­sued to all in­sur­ance com­pa­nies, read that “pur­suant to the pow­ers con­ferred by the en­abling laws, the Com­mis­sion hereby with­draws and can­cels the Cir­cu­lar dated Au­gust 27, 2018 with ref­er­ence num­ber NAICOM/ DAPCIR/14/2018 and ti­tled Tier Based Sol­vency Cap­i­tal Pol­icy for In­sur­ance Com­pa­nies in Nige­ria.”

Ob­servers are of the view that the with­drawal and can­cel­la­tion may prob­a­bly be con­nected to the lit­i­ga­tion by share­hold­ers, who were not com­fort­able with the pol­icy.

They noted that the step taken by the reg­u­la­tor is aimed at ter­mi­nat­ing the lit­i­ga­tion as the par­ties in court would no longer have any base to pur­sue their case.

Uche Uwaleke, a pro­fes­sor of fi­nance at the Univer­sity of Nasarawa who had spo­ken to busi­ness a.m ear­lier on the ben­e­fits of the TBMSC, said the court or­der which em­anated from con­cerns of some in­sur­ance firm share­hold­ers, was borne out of them be­ing desta­bilised thus caus­ing the furore.

He said “I think re­cap­i­tal­i­sa­tion for in­sur­ance firms is some­thing that should be wel­comed as it’s been done in the in­ter­est of the in­dus­try, just as we have seen in the suc­cess recorded in the bank­ing in­dus­try.

Uwaleke noted that in do­ing this, he be­lieves stake­hold­ers should be car­ried along, but what he sees as a mis­take on the part of NAICOM is bring­ing for­ward the dead­line from Jan­uary to Oc­to­ber.

Mean­while, Rasaaq Salami, head of the com­mis­sioner’s direc­torate dis­closed that three new di­rec­torates have been cre­ated in the com­mis­sion bring­ing the to­tal num­ber of di­rec­torates to nine.

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