There are indications that over 100 insurance companies currently operating in Nigeria may dissolve into not more than 25 firms come the 28 February, 2007 as a result of the consolidation exercise in the industry.

This is in accordance with the Federal Government’s directive that insurance companies wishing to remain in business beyond that day should shore up its capital base.

On 5 September, 2005, the Federal Government through the former Minister of Finance, Mrs. Ngozi Okonjo-Iweala, announced a new minimum capital base for the insurance industry.

Life insurance companies are required to shore up their capital base from N150 million to N2 billion, Non-Life insurance companies should jack up their minimum capital base from N200 million to N3 billion while the reinsurance companies are mandated to increase theirs from N350 million to N10 billion.

The Commissioner for Insurance and the Chief Executive of National Insurance Commission (NAICOM), Chief Emmanuel Chukwulozie, had since the announcement released guidelines that would enable the operators to comply with the directive promptly in order to avoid mass liquidation as happened in the banking sector.

However, in spite of his efforts to ensure that at least all the operators remain in business either through merger and acquisition or to go it alone, some, obviously may not make it.

Chukwulozie, while delivering a lecture at the maiden inaugural and investure ceremony of the Institute of Credit and Risk Management of Nigeria in Lagos recently said that 22 applications for merger consisting of 60 insurance companies had already been submitted to his office for consideration.

He added that those that met the basic requirement had been given the pre merger consent according to the laid down rule.

The NAICOM boss said the number of the companies that had submitted their merger plans, so far was an indicator to the number of insurance companies that would probably exist beyond the February 2007 deadline.

He said there was no deliberate effort to reduce the number of the 104 insurance and five reinsurance companies currently operating in Nigeria.

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