Insurance Sector Prepares for Major Capital Raising Amid Regulatory Changes
Five insurance companies have announced plans to raise approximately N75 billion in additional capital from the market as part of their efforts to meet new minimum capital requirements. This move comes in response to the Nigerian Insurance Industry Reform Act 2025, which significantly increases the capital thresholds for various types of insurance firms.
The companies involved include SUNU Assurances, Sovereign Trust Insurance, Linkage Assurance, Guinea Insurance, and Veritas Kapital Insurance. According to their corporate filings on the Nigerian Exchange Limited, most of these firms have received board-level approval and are now seeking shareholder consent to proceed with the capital-raising initiatives. The methods they plan to use include rights issues, public offers, and private capital placements. Additionally, some companies have already approved mergers as part of their strategy.
New Minimum Capital Requirements Under NIIRA 2025
The Nigerian Insurance Industry Reform Act 2025 has introduced stricter capital requirements for the insurance sector. Under this act, non-life insurers must maintain a minimum capital base of N15 billion, while life insurance firms are required to have at least N10 billion. Reinsurance companies will need to increase their capital threshold to N35 billion.
This regulatory shift has prompted several companies to take immediate action. For instance, Guinea Insurance recently informed the public that it would hold an Extraordinary General Meeting to seek shareholder approval for raising up to N15 billion in additional capital. Part of the proposed resolutions includes increasing the company’s issued share capital from N4 billion to N19 billion, along with authorizing the board to raise up to N15 billion through a rights issue and private placement.
Sovereign Trust Insurance has already received shareholder approval to raise up to N20 billion in additional capital. The board has approved a N5 billion rights issue, which is expected to be completed by the first quarter of 2026. The company stated that this step aligns with the requirements of the NIIRA 2025 and aims to strengthen its financial position.
Shareholder Approvals and Recapitalisation Plans
SUNU Assurances Nigeria Plc also received shareholder approval to raise up to N9 billion to meet the new minimum capital requirement for non-life insurers. The company’s board has been empowered to raise capital through a mix of rights issues, private placements, public offers, or other fundraising structures, subject to regulatory approval.
Linkage Assurance received approval at its recent Extraordinary General Meeting to raise N16 billion through a combination of private placements, rights issues, and public offers. Similarly, Veritas Kapital Insurance received shareholder consent to raise about N15 billion via a private placement, which will also lead to an increase in the company’s share capital.
Other companies such as Lasaco Assurance and Regency Alliance have also taken steps to raise capital ahead of the 2026 deadline for recapitalisation. Lasaco Assurance raised N11.1 billion via private placement, while Regency Alliance obtained shareholder consent for various capital-raising combinations.
Regulatory Measures and Compliance
The National Insurance Commission (NAICOM) has emphasized the importance of compliance with the new capital requirements. To ensure transparency and credibility, NAICOM has partnered with the Big Four audit firms, including EY, for independent verification of compliance with the Minimum Capital Requirement (MCR). Funds raised for recapitalisation must be deposited in dedicated escrow accounts with the Central Bank of Nigeria to safeguard policyholder interests.
In an earlier circular, NAICOM highlighted that certain assets, such as encumbered assets or those without perfected title, are not admissible for meeting the MCR. Companies that fail to meet the prescribed capital requirements within the stipulated timeframe may face liquidation, merger, or other regulatory actions.
Industry Response and Future Outlook
The regulator described the industry’s response to the recapitalisation process as encouraging. As of now, around 18 companies have indicated their readiness for capital verification. However, not all companies are planning to raise additional capital. Cornerstone Insurance Plc, for example, has confirmed that it already meets the new MCR and does not intend to raise further capital unless it acquires another company.
According to its third-quarter report, Cornerstone Insurance’s share capital stood at N9.08 billion, with shareholders’ funds exceeding N67 billion. This positions the company well to meet the new regulatory standards without the need for external financing.
Prior to the signing of the bill, Agusto & Co. had predicted that the insurance sector would require an additional N600 billion in capital as the wind of recapitalisation spread across the industry.
