On 3 June 2020, the National Insurance Commission (“NAICOM” or the “Commission”) issued a Circular No NAICOM/DPR/CIR/25-04/2020 (the “Circular”) conveying its decision to segment the recapitalisation process and extend the deadline for the implementation of the recapitalisation exercise by insurance and reinsurance companies.
NAICOM noted that the COVID-19 pandemic has negatively impacted efforts to proceed with the 31 December 2020 deadline for the completion of the recapitalisation exercise. The review of the deadline therefore became imperative to mitigate the far-reaching effects of the pandemic on the exercise.
By virtue of the Circular, the recapitalisation process has been segmented into two phases and insurance operators are required to complete each phase within the stipulated deadlines.
In the first phase, insurance companies are required to obtain 50% of the new capital requirement by 31 December 2020, while reinsurance companies are required to have obtained 60% of the new capital requirement by the same date. The second phase of the recapitalisation process requires both insurance and reinsurance companies to attain full compliance of the capital requirements not later than 30 September 2021.