Minimum Paid-up share capital policy for insurance and reinsurance companies in Nigeria

On the 20th May 2019, the National Insurance Commission (NIACOM) issued a Circular which increases the minimum paid up capital required to be held by insurance and reinsurance companies operating in Nigeria. The Circular  increases the paid up capital of Life Insurance companies from N2,000,000,000.00 (Two Billion Naira) – $5,548,169.589 USD  to N8,000,000,000.00 (Eight Billion Naira) – $22,192,668.36 USD whilst, General Insurance companies will now need to have a paid up capital of  N10,000,000,000.00 (Ten Billion Naira) – $27,740,835.452 USD  from N3,000,000,000.00 (Three Billion Naira) – $8,322,250.474 USD and Composite Insurance companies will now need a paid up capital of N18,000,000,000.00 (Eighteen Billion Naira) – $49,933,502 USD  from N5,000,000,000.00 (Five Billion Naira) – $13,870,414.03 USD previously .

The Circular effectively restructures the insurance industry in Nigeria by mandating capital requirements that ensure Insurance and reinsurance firms have a deep capital base that can support service delivery channels. Consequently, operators will now have to consider merging or acquisition to be able to meet the new capital requirements. This could mean more effective insurance companies emerge, with better profitability, operational efficiency and service to customers.