Six insurance firms mull merger plan

Six insurance firms mull merger plan

Chuks Udo Okonta

About six insurance firms are seriously engrossed in silent merger talks to boost their performance Inspen has learnt.

The Commissioner for Insurance Fola Daniel, who confirmed this, said several firms are fine-tuning their merger plans. He said the new twist by operators aligns with the National Insurance Commission (NAICOM) transformation programme.

He noted that the commission over the years have been working assiduously to grow companies that can compete favourably in the global sphere. He lauded the merger plans by Cornerstone Insurance Plc and Linkage Assurance Plc.

He said: “We want bigger companies; we want bigger players’ not faint firms. The merger plans between Cornerstone Insurance Plc and Linkage Assurance Plc is in line with our reforms programme.

“There are several companies that are looking at merger, at least there are half a dozen that are doing so presently. I would not give their names for they are at very stages trying to do what they need to do and it would not be nice to name them.”

He urged policy holders and other stakeholders to look forward to more vibrant industry that would be made up of companies with adequate strength and consumer friendliness.

President Chartered Insurance Institute of Nigeria (CIIN) Dr Wole Adetimehin, said the move is to build mega companies, adding that companies have realised that they cannot harness more of the opportunities in the industry with solo effort. He noted that reforms initiated by the government and NAICOM have opened up more businesses for the industry.

“Presently, there are some silent moves where some people are planning to merge to become mega companies,” he said.

Director General Nigerian Insurers Association (NIA) Sunday Thomas, said NAICOM has put in place structures to enable companies have the required capital that can underwrite the type of risk they cover, adding that some companies have begun consultations on how to raise their capital to enable them key into the opportunities provided by the Local Content Act, especially in the oil and gas insurance business.

 “The capital base may not be adequate, but I am aware that companies that want to operate within the Local Content are making efforts to shore-up their capital. Also, NAICOM is working very hard to put in place risk-based supervision. And one of the fundamentals of risk-based supervision is risk-based recapitalisation.

“Risk-based recapitalisation measures the type of business in relation to the capital to back-up the business. Some companies may not be there now, but they would not be allowed to operate beyond their capacity. I think NAICOM is doing a good job in that direction. For the industry, efforts are been made to shore-up capital and of course, there have been discussions about mergers and how companies can be bigger, because companies have realised that there is beauty in been big. If they are big, they will be able to increase their capacity to retain more businesses and that will impact the economy through job creation,” he added.