Capital increase for insurance and reinsurance companies in Nigeria

The National Insurance Commission (NAICOM) published a new circular on 20 May, increasing the minimum paid-up capital of insurance and reinsurance companies.

The new regulations stipulate that:

• For life insurance companies, the minimum paid-up capital will increase to 8 billion NGN (22.2 million USD) against 2 billion NGN (5.5 million USD) currently.
• For non-life insurance companies, the minimum capital threshold is expected to reach 10 billion NGN (27.6 million USD) against 3 billion NGN (8.3 million USD) currently.
• For composite companies (life and non-life) the minimum paid-up capital will be raised to 18 billion NGN (49.7 million USD) against 5 billion NGN (13.8 million USD) currently.
• For reinsurance companies, the minimum paid-up capital will increase from 10 to 20 billion NGN (27.6 to 55.3 million USD).

These new capitalization requirements will come into effect as of June 30, 2020 for the existing companies and are applicable since May 20, 2019, date of publication of the circular for the new companies.

It should be recalled that in December 2018, NAICOM gave up a previous recapitalisation, following the refusal of insurers who had filed a lawsuit against the Commission.

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