The Impact of NAICOM’s Recapitalization Policy on the Financial Stability of Nigerian Insurers

This study empirically assesses the impact of NAICOM's recapitalization directives on the financial stability and operational performance of Nigerian insurance companies using pre and post-recapitalization data. NAICOM's recapitalization policy, which increased minimum paid-up capital requirements for life, non-life, and reinsurance companies, was designed to strengthen solvency buffers, improve underwriting capacity, and enhance consumer confidence. However, the policy's actual impact on the financial stability of surviving firms and its consequences for market concentration have not been empirically evaluated. This study employs a quasi-experimental before-and-after design comparing financial stability indicators including capital adequacy ratio, solvency margin, investment income, and claims payment capacity for a panel of twenty insurance companies for three years before and after the recapitalization effective date. Difference-in-differences estimation is applied where feasible, comparing firms that raised new capital against those that merged. Secondary data are drawn from NAICOM's regulatory returns, company annual reports, and NGX disclosures. Preliminary findings are expected to indicate improved solvency ratios among recapitalized firms but potential market concentration risks arising from mergers. The research informs ongoing policy debate on optimal capital requirements for Nigerian insurance companies. Keywords: Recapitalization, Financial Stability, NAICOM, Insurance Companies, Capital Adequacy.