Regency Alliance Insurance recently put out a notice to the Nigeria Stock Exchange (NSE) that its subsidiary in Ghana was merging with a subsidiary of a Nigerian insurance company, NEM insurance. The name of the company will be called RegencyNem Insurance Ltd Ghana.
The National Insurance Commission of Ghana had in 2015 increased the capital requirements of insurance companies from GHC5 million to GHC15 million. An amount roughly equal to $3 million. The press release suggest that the company was unable to raise capital by itself hence the merger.
With the merger now in place, some investors are already speculating of a likely merger of the entities businesses in Nigeria. Mergers and acquisitions are anticipated in the Nigerian Insurance space in 2017 thus fueling speculations.
A 2015 annual reports for Regency Alliance show an issued and paid up capital of N3.3 billion and shareholders funds of N4.5 billion. NEM on the other hand has an issued and paid up capital of N2.6 billion and shareholders funds of N6.1 billion naira as at December 2015. A merger would create an insurance firm with shareholders fund exceeding N10 billion. Very few insurance firms in Nigeria presently have such a share capital.
The National Insurance Commission (NAICOM) has stated that it will carry out a capital verification exercise within the year. That will likely increase the volume of mergers and acquisitions within the insurance industry.
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