COVID-19 & #ENDSARS Fallout: Nigerian insurers want recapitalisation deadline extended

Nigerian insurers are calling for an extension of the recapitalization exercise deadline to December 2021, citing the need for more time to assess the impact of both the COVID-19 pandemic and the recent fallout from the nationwide #ENDSARS protests. The demands come as the industry grapples with unprecedented challenges that have significantly affected their operations and financial stability. The recapitalization exercise, which was initially scheduled to be completed in phases by June 2020 and September 2021, has faced delays and uncertainties due to the emergence of the global pandemic and the civil unrest in Nigeria. The insurance sector, which plays a vital role in providing resilience for the economy, is seeking regulatory support to navigate through these turbulent times. Ayodeji Ajilore, Investment Research Analyst at Meristem Securities, and Femi Oladehin, Partner; Investment Banking at Argentil Capital Partners, joined CNBC Africa to discuss the impact of these events on Nigeria's insurance industry and the way forward. Ajilore highlighted the historical context of the recapitalization exercise, emphasizing the importance of aligning compliance with the evolving economic landscape. He acknowledged the challenges posed by COVID-19 but stressed the significance of meeting regulatory requirements to ensure the sector's stability and growth. Oladehin echoed these sentiments, underscoring the dual impact of the pandemic and the #ENDSARS protests on the insurance sector. He emphasized the need for regulatory flexibility and collaboration to safeguard the industry's sustainability. Despite the disruptions caused by these events, Ajilore noted that some insurance companies have made significant progress towards meeting the recapitalization deadline. He highlighted instances where companies successfully increased their paid-up capital through retained earnings and organic growth strategies. While acknowledging the industry's efforts to comply with regulatory mandates, Ajilore cautioned that the relaxation of deadlines may not be a viable solution in the long term. He emphasized the importance of balancing regulatory requirements with the industry's operational realities and long-term viability. Oladehin echoed this sentiment, calling for a collaborative approach between regulators and industry players to address the sector's challenges and ensure its continued relevance in Nigeria's economy. The call for an extension of the recapitalization exercise deadline reflects the urgent need for a strategic and sustainable path forward for Nigeria's insurance industry amidst a volatile economic environment shaped by the COVID-19 pandemic and social unrest. Regulatory support and industry collaboration will be crucial in navigating these challenges and charting a resilient future for the sector.