The Federal Ministry of Finance has directed the National Insurance Commission to suspend enforcement of disputed recapitalisation fees and capital transfer requirements imposed on NICON Insurance Limited and Nigeria Reinsurance Corporation pending a review of their petition.
The directive followed complaints by the two companies over aspects of the ongoing insurance industry recapitalisation exercise under the Nigerian Insurance Industry Reform Act 2025. In a letter dated August 6, the ministry asked NAICOM to explain the legal basis for the disputed charges and directives.
NICON and Nigeria Reinsurance challenged a one per cent capital injection fee, additional processing and verification charges, and a requirement to transfer their entire recapitalisation funds into an escrow account with the Central Bank of Nigeria. They said the disputed fees amounted to ₦305 million for NICON and ₦375 million for Nigeria Re.
The companies also argued that the full-capital escrow requirement exceeded the 10 per cent statutory deposit obligation under Section 16(3) of NIIRA 2025. They said they had already met their adjusted recapitalisation requirements before the July 31 deadline.
According to their petition, NICON injected ₦20 billion into a Mudaraba Term Deposit account with Lotus Bank, exceeding its adjusted capital requirement of ₦16 billion. Nigeria Re, meanwhile, injected ₦30 billion against its adjusted requirement of ₦28 billion. Both companies also deposited ₦2.5 billion and ₦3.5 billion respectively with the CBN as statutory deposits.
The companies disclosed that they had already made initial payments of ₦80 million and ₦75 million in fees. The dispute therefore centres on whether further payments and the transfer of their entire capital injection funds into the CBN escrow arrangement are justified after the companies had met the applicable recapitalisation requirements.
The Finance Ministry has now placed the disputed measures on hold while NAICOM provides a detailed response and legal justification. The intervention is not a final determination of the dispute but could have wider implications for other insurers undergoing recapitalisation, particularly if questions surrounding the additional fees and escrow requirements extend beyond NICON and Nigeria Re.
