Insurance companies will need $725 million (about N261.5 billion) to meet the new capital requirement of the National Insurance Commission (NAICOM), Africa Re has said.
Speaking on the sideline of the just concluded African Insurance Conference (AIO) in South Africa, its Group Managing Director, Cornellie Karekezi, said the companies may not be able to meet the June 2020 deadline set by the regulator if they do not intensify effort to seek for capital.
NAICOM had last month, mandated all the 57 insurance and two re-insurance firms in the country to increase their minimum paid-up share capital. They are to recapitalise within 13 months or lose their licences.
The commission raised the minimum paid-up share capital of Life Insurance company from N2 billion to N8 billion; Non-Life from N3 billion to N10 billion and Composite from N5 billion to N18 billion. Re-insurance companies were directed to raise their capital base from N10 billion to N20 billion.
Karekezi said it is a welcome development for them as reinsurers.
He said: “Re-insurers should be strong. We want re-insurers who are strong so that we can go into other markets and do good business.
“A re-insurer cannot stay in one market because it is an international business; so you can’t have N20 billion or N10 billion or N5 billion and you want to go to insure in Mozambique or Botswana or any other country. It doesn’t make sense; you need some level of capital. So the increase is very okay for reinsurers. There is no pity for reinsurers. We are supposed to be strong and big.”