In December 2024, the Nigerian Senate approved a major revision to the capital requirements for insurance companies a move that signals more than just a regulatory tweak. Under the new rules, the minimum capital base for general insurance increased from ₦3 billion to ₦15 billion, life insurance from ₦2 billion to ₦10 billion, and composite insurers must now hold ₦25 billion. While these changes might seem routine, their implications are both profound and far-reaching for the insurance industry and the Nigerian economy as a whole.
Expanding Risk Capacity and Local Retention
One of the most immediate impacts is the enhanced capacity of insurers to absorb and retain risk. For years, Nigerian insurance firms have been limited in their ability to underwrite high-value risks, especially in capital-intensive sectors like oil, gas, and aviation. As a result, over two-thirds of such risks have been ceded to international markets due to inadequate local capital. The strengthened capital base enables insurers to keep more of these risks, and their associated premiums, within the country, reducing reliance on foreign underwriters and boosting the local industry.
Reflecting Economic Realities
The timing of the capital hike is also significant. Nigeria’s economic environment is grappling with inflation, currency devaluation, and shifting asset values. In Lagos, a single high-end property can now cost upwards of ₦3 billion, more than the entire capital base of some insurers prior to the adjustment. This glaring mismatch highlighted the urgent need for insurers to scale up to reflect present-day economic realities. The revised capital thresholds are, in this context, not just sensible, they’re essential.
Still Modest by Global Standards, But a Meaningful Step
Even with the revised requirements, Nigerian insurers are still playing catch-up on the global stage. At current exchange rates, ₦15 billion in capital equates to roughly $10 million. That’s a considerable improvement from the previous benchmark of under $2 million, yet still modest when viewed against the size of the risks insurers must manage. However, progress often comes incrementally, and this adjustment marks a clear step in the right direction.
Unlocking Growth Across the Sector
The benefits of a better-capitalized insurance sector extend beyond increased risk retention. With more robust balance sheets, insurers can invest in modern technologies, broaden their distribution networks, develop more customer-centric products, and compete for top talent. These advancements will not only elevate individual companies but also help create a more resilient and responsive insurance ecosystem in Nigeria better positioned to meet the diverse needs of businesses and consumers alike.
Insurance as a Pillar of National Development
A strong insurance sector plays a foundational role in national development. From construction failures to industrial accidents and infrastructure breakdowns, the risks facing Nigeria are complex and growing. Well-capitalized insurers act as a financial shock absorber helping individuals and enterprises recover, rebuild, and continue contributing to the economy. In this sense, insurers are silent but vital partners in Nigeria’s growth journey.
IEI’s Strategic Path to Compliance and Growth
At International Energy Insurance PLC (IEI), these regulatory changes are being met with decisive action. We’ve already begun positioning the company to meet the new capital requirement of ₦15 billion and ensure long-term financial stability. At our 44th Annual General Meeting in April 2025, shareholders approved a comprehensive recapitalization strategy. A key milestone was the successful resolution of the longstanding Daewoo Loan, achieved through a strategic debt transfer to Norrenberger Advisory Partners Limited, which now holds equity in IEI. This transaction not only closed a significant chapter in our financial history but also cleared the path for future growth.
In addition, shareholders endorsed an increase in the company’s issued share capital and empowered the Board to pursue various capital-raising instruments. These initiatives demonstrate our commitment to regulatory alignment, financial health, and strategic growth anchored in a forward-looking vision and disciplined execution.
As Nigeria’s insurance landscape evolves, capital adequacy will remain a key driver of stability, innovation, and trust. With stronger foundations, insurers are better equipped to support economic development, protect livelihoods, and confidently navigate the future.
