‘Reinsurers must build capacity to retain African risk market’

Nigeria’s insurance recapitalisation exercise may achieve limited results unless operators translate higher capital bases into stronger underwriting capacity, improved claims settlement and greater retention of risks within the domestic market, the National Insurance Commission (NAICOM) has warned.

Speaking at an insurance industry leaders’ forum organised by FBS Reinsurance Limited in Lagos at the weekend, the Commissioner for Insurance, Olusegun Omosehin, urged reinsurers to invest in technology, technical expertise, data-driven underwriting and strategic partnerships to improve the industry’s capacity to absorb more risks.

In a keynote address delivered on his behalf by the Head of NAICOM’s Lagos Control Office, Julius Odidi, Omosehin said the Nigerian Insurance Industry Reform Act (NIIRA) 2025 had provided a foundation for strengthening the sector. However, he stressed that the success of the reforms should be measured by improved operational efficiency, stronger risk management and better policyholder protection.
He said operators must move beyond meeting regulatory capital requirements to building institutions capable of underwriting larger and more complex risks, settling claims promptly and restoring public confidence.

The regulator’s warning highlights a longstanding weakness in Nigeria’s insurance market, where inadequate domestic underwriting and reinsurance capacity has encouraged the transfer of substantial risks to foreign reinsurers. This has resulted in capital outflows and limited the industry’s ability to retain more premiums locally.

For operators, therefore, the challenge extends beyond raising funds to meet the new capital thresholds. They must also deploy the additional resources productively through better risk assessment, sound underwriting practices and stronger reinsurance arrangements.
Managing Director/Chief Executive Officer of FBS Re, Ganiyu Musa, said the company was positioning itself to become a leading reinsurance institution in Africa and the global market through regional expansion and a planned capital-raising programme.
Musa said experienced insurance professionals established FBS Re out of concerns about the state of the reinsurance market and the need to strengthen indigenous capacity.

He said the company remained committed to retaining more insurable risks within Africa while supporting the development of Nigeria’s insurance market.

According to him, the company’s expansion ambition aligns with NAICOM’s call for Nigerian insurance operators to explore opportunities in other markets. However, the pace of expansion would depend on regulatory requirements, prevailing market conditions, risk appetite and available financial resources.

Musa also disclosed that the board was considering a capital-raising programme that would enable existing stakeholders and prospective investors to participate through a private placement, followed by an initial public offering (IPO).
He said the proposed exercise would provide additional resources to support the company’s expansion and strengthen its capacity to compete in the African reinsurance market.

The planned capital raise comes as insurance operators adjust to the higher capital thresholds introduced under NIIRA 2025. The new requirements prescribe minimum capital of N10 billion for life insurers, N15 billion for non-life insurers, N25 billion for composite insurers and N35 billion for reinsurers.

Industry stakeholders have argued that the recapitalisation exercise must deliver more than stronger balance sheets. They expect the additional capital to translate into improved underwriting discipline, better risk management, faster claims settlement and greater capacity to support large infrastructure and commercial projects.
Chairman of FBS Re, Bala Zakariyau, commended the board for providing strategic direction and governance, expressing confidence in the company’s expansion plans.

He also acknowledged the contribution of Fola Daniel, a director of the company, who initiated and championed its establishment and served as its pioneer Managing Director/Chief Executive Officer before moving to a non-executive board position.