Insurers Need to Raise N400bn to Meet New Capital Requirement

Insurers in Africa’s most populous nation must raise around N400 billion to meet the new capital requirement, according to research house Meristem Securities Limited.

In a note sent to clients, analysts at Meristem Securities anticipate a likely influx of strategic capital investment from foreign investors into the Nigerian insurance market, while the existing foreign investors may increase their equity holdings in their respective companies.

“We recognise that some well-capitalised insurers may have the potential to acquire smaller companies facing capital shortfalls, especially as some of these companies may struggle to raise additional funds from the stock market,” said the analysts.

It is crystal clear there is going to be series of mergers and acquisition whereby the big fish (well capitalised firms) swallow (acquire) the small ones who do not have a strong capital base or unable to raise enough capital to meet the deadline as president Bola Ahmed Tinubu has signed the 2025 insurance bill into law.

The new law proposes that the minimum capital required for life, non-life, and reinsurance businesses be raised to N10 billion, N15 billion, and N35 billion, respectively.

However, the analysts noted that some composite insurers may choose to scale down their operations, focusing exclusively on either life or non-life insurance.

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