Insurance Companies in Nigeria Boost Capital to Meet New Regulatory Standards
As the Nigerian Insurance Industry Reform Act (NIIRA) 2025 approaches, several listed insurance companies are intensifying their efforts to strengthen their capital base. This move is aimed at meeting the stringent regulatory requirements introduced by the reform law. Eight insurers listed on the Nigerian Exchange Limited (NGX) have embarked on various capital-raising initiatives, collectively targeting an estimated N78.66 billion.
The companies involved in these efforts include Lasaco Assurance Plc, International Energy Insurance Plc, Linkage Assurance Plc, Guinea Insurance Plc, Universal Insurance Plc, Sunu Assurances Nigeria Plc, Sovereign Trust Insurance Plc, and Regency Alliance Insurance Plc. These firms are exploring different funding avenues such as rights issues, public offers, private placements, special placements, and fresh equity injections from existing shareholders.
Leading the Charge: Lasaco Assurance
Among the insurers, Lasaco Assurance has emerged as the largest fundraiser. The company recently concluded a successful rights issue that raised N19.30 billion, surpassing its target of N18.47 billion by approximately 4.5 per cent. This achievement followed the approval by the Nigerian Exchange for the listing of 9.24 billion ordinary shares at N2.00 per share, offered on a five-for-six basis.
Mr. Ademoye Shobo, Managing Director and Chief Executive Officer of Lasaco Assurance, highlighted the significance of this capital-raising exercise. He described it as a strong vote of confidence in the company’s long-term strategy and emphasized the commitment to transparency, accountability, and responsible corporate governance.
Other Insurers Following Suit
International Energy Insurance Plc is raising about N17.50 billion through a public offer, while Linkage Assurance Plc is seeking N16.26 billion via a rights issue. Linkage Assurance's offer comprises 12.32 billion ordinary shares of 50 kobo each at N1.32 per share, based on two new ordinary shares for every three existing shares held by shareholders.
Guinea Insurance Plc has also started its recapitalisation programme, aiming to raise N5.82 billion through a rights issue. The company is offering 5.30 billion ordinary shares of 50 kobo each at N1.10 per share, pre-allotted to shareholders in the ratio of two new shares for every three shares held as of the qualification date.
Universal Insurance Plc, which had earlier secured shareholders' approval to raise up to N15 billion, has commenced the first phase of the exercise with a N3.20 billion rights issue. The company plans to issue 2.67 billion ordinary shares of 50 kobo each at N1.20 per share, with shareholders entitled to one new share for every six shares held as of the qualification date.
Diverse Strategies for Capital Raising
Sunu Assurances Nigeria Plc, Sovereign Trust Insurance Plc, and Regency Alliance Insurance Plc are seeking to raise N9.34 billion, N5.02 billion, and N3.04 billion, respectively, through a combination of equity and debt instruments. These capital-raising programmes may involve ordinary shares, preference shares, bonds, debentures, subordinated instruments, convertible securities, mezzanine financing, rights issues, private placements, public offers, or other financing structures permitted under existing laws and regulations.
Impact of the NIIRA 2025
The renewed drive to shore up capital follows the enactment of the Nigerian Insurance Industry Reform Act (NIIRA) 2025, which significantly increased the minimum capital requirements for operators across the insurance value chain. Under the new law, the minimum capital requirement for life insurance companies was raised from N2 billion to N10 billion. Non-life insurance firms are required to maintain a minimum capital of N15 billion, up from N3 billion. Reinsurance companies are expected to raise their capital base from N10 billion to N35 billion.
Market analysts believe that the recapitalisation exercise could mirror the transformation seen during the banking sector consolidation, attracting substantial inflows from both domestic and foreign investors while strengthening the financial capacity of insurance companies.
According to Agusto & Co, the recapitalisation of existing insurance companies alone could inject about N600 billion in fresh equity into the industry, significantly improving operators' underwriting capacity, risk retention capability, and overall financial resilience.
Expert Insights
The Managing Director of HighCap Securities, Mr. David Adonri, stated that the recapitalisation initiative is justified given the increasing scale and complexity of risks insurers would be required to underwrite under the new legal framework. He noted that the exercise is expected to attract fresh investors and new capital into the industry. However, some operators may ultimately opt for mergers or other forms of business combinations to meet the new regulatory thresholds.
"Listed insurance companies have the advantage of accessing long-term capital through the stock market," he said. "Some operators are already sufficiently capitalised for the category of business they undertake. However, time will determine whether this recapitalisation exercise will fundamentally change the negative perception that many investors and members of the public still have about the insurance industry," Adonri added.
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