Nigeria’s insurance companies must strengthen governance, risk management and operational capabilities to preserve the benefits of the latest recapitalisation exercise, rating agency DataPro Limited has said.
The agency, in its latest edition of Insurance Today, said meeting the new minimum capital requirements was only the beginning of a broader process of building sustainable financial strength.
The National Insurance Commission (NAICOM) has cleared 48 insurance companies and two reinsurance companies that met the new minimum capital requirements under the Nigerian Insurance Industry Reform Act (NIIRA).
According to DataPro, the exercise has strengthened the financial foundation of the industry, but the next question is whether insurers can effectively protect and deploy the capital they have raised.
Capital opens the door
The rating agency explained that capital provides insurers with the capacity to absorb unexpected claims, investment losses and other financial shocks, while supporting greater underwriting capacity and financial flexibility.
However, it noted that a larger capital base does not automatically translate into a stronger credit profile.
“Capital gets in the room. Capability keeps you in business,” DataPro stated, citing a key message from the recently concluded Risk Audit and Compliance Committee (RACC) 2026 Annual Retreat.
The retreat, themed “Capability: Driving Resilience, Innovation & Trust through Governance, Risk & Compliance,” highlighted the importance of the systems and expertise required to sustain financial strength.
DataPro said rating agencies assess not only the amount of capital held by an insurer, but also its quality, sustainability and ability to withstand different operating conditions.
Governance, risk management critical
The agency identified a resilience chain of Governance → Risk → Controls → Data → Capability → Trust, noting that each link plays a role in protecting an insurer’s financial position.
It explained that governance sets the direction, risk management identifies and manages exposures, controls provide discipline, while reliable data supports sound decision-making.
People, systems, technology and expertise, it added, determine an organisation’s capability to respond effectively to challenges.
According to DataPro, weaknesses in any of these areas could erode capital, even where an insurer has a strong financial position.
Poor underwriting, ineffective controls, concentrated risks and unreliable information, it said, could expose insurers to financial pressure and weaken their credit profiles.
Risks that could test capital buffers
The agency noted that insurers would continue to face risks capable of testing the stronger capital buffers created by the recapitalisation exercise.
It identified counterparty and credit risks arising from exposures to banks, reinsurers and other counterparties, particularly where such exposures are concentrated.
Underwriting risk, it said, would remain central, as inadequate pricing, reserving and claims management could weaken profitability and capital.
Operational risks, including technology failures, fraud and control weaknesses, could also create unexpected financial and reputational costs.
DataPro therefore stressed that the ability to anticipate and manage these risks would be as important as the size of an insurer’s capital base.
From capital to credit strength
The rating agency said the recapitalisation exercise had raised the financial capacity of compliant insurers, but the next phase would be about converting that capacity into resilience.
“For Rating Agencies, stronger capital is a positive starting point, but sustainable credit strength will depend on the quality of governance, risk management, controls, data and organisational capability supporting it,” it stated.
DataPro concluded that while capital provides the capacity to absorb shocks, capability determines how effectively that capacity is preserved and deployed.
“This is the real nexus between insurance recapitalisation and ratings,” the agency said.
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