Nigerian insurance industry’s recapitalisation and new N18b boost
Recapitalisation is a form of 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.
In preparedness to meet the new minimum paid-up capital requirement for the insurance industry, AIICO Insurance Plc received shareholders’ approval to increase its authorised share capital from N10 billion to N18 billion.
The company’s Head, Strategic Marketing and Communications, Segun Olalandu, told The Guardian that the approval was given at the company’s Extra-Ordinary General Meeting, in Lagos, last week, where “the shareholders demonstrated their support by voting in favour of this proposition.”
The Chairman, Kundan Sainani, while speaking at the meeting, stated that “AIICO has received NAICOM’s No Objection to its recapitalisation plan. The company’s recapitalisation plan includes a combination of private placement, rights issue and bonus issue.”
The Managing Director, Babatunde Fajemirokun, also said “the private placement is at an advanced stage with a number of investors. Therefore, the shareholders also approved amendments to the Memorandum of Association to reflect the addition of new investors.
“These are exciting times for us as a business and we are confident that the recapitalisation exercise will see the company emerge stronger, more resilient, with adequate capacity and competencies to continue to provide risk protection and value-adding services to all our customers.”
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