Insurers restate plans for industry’s recapitalisation
As insurers show commitment to the ongoing recapitalisation exercise in the industry, they explain that a process is a form of a corporate reorganisation, which involves making substantial changes to a company’s capital structure.
It is one of the strategies companies use to improve their financial stability. Currently, the insurance industry is undergoing the process.
The decision to recapitalise may be taken by the company voluntarily, but sometimes a company undertakes compulsory recapitalisation in compliance with a regulatory directive. In the latter sense, recapitalisation has proven to be a useful tool in the hands of the authorities for sectoral reformation to sustain adequate economic growth and development.
To meet the compulsory recapitalisation requirements by the National Insurance Commission (NAICOM), the sector operators will have to raise additional funds or go through mergers and acquisitions.
Meanwhile, the Nigerian insurance market has been faced with different challenges in its efforts to serve the needs of the relevant stakeholders. As a result, (NAICOM), the body responsible for the regulation of the industry has over time devised different means in its aim to achieve this.
Consequent to the June 30, 2020, deadline given by National Insurance Commission (NAICOM) for companies to comply with its new capital regime, Guinea Insurance Plc, at its 61st yearly general meeting held in Uyo, Akwa Ibom State, received shareholders’ nod to increase its capital base to N12 billion.
With the approval, the underwriting company hopes to increase its Authorised Share Capital from N4billion to N12 billion by the addition of N8billion divided into 16 billion ordinary shares of 50 kobo each, ranking in all respect pari-pasu with the existing shares.
The Chairman of the company, Godson Ugochukwu, said penetrating insights and sustainable fair shakes will boost get-up-and-go capital structure reorganisation action plans.
According to him, options available to us are either to approach the capital market by way of a public offering, private placements, rights issue, book building process or other methods, inject funds into the company or consider the possibility of a merger with another company operating in the general insurance business portfolio.
“In any case, the board had engaged the services of professional parties and advisors to provide matter-of-fact counsel that will engender accuracy and timely decision making especially, as we are materially mindful of the stipulated time frame given by the regulator”, he said.