Recapitalisation funds pour in

Proshare

December 12, 2007/Vanguard

 

More companies will, this week, receive the monies paid into a dedicated account in Central Bank as proceeds from their recapitalisation exercise. Over N50billion is expected.

 

The funds started coming in more than a week ago after government\'s intervention in the post-consolidation crisis in the industry. Cornerstone, Insurance PHB, Wapic Intercontinental are among the companies that have their accounts already credited.

 

Unconfirmed reports also put the number of insurers that have received their funds at 15, while many others are certain that their accounts will be credited before the end of the week

 

African Alliance and Guinea Insurance have confirmed that they expect their accounts to be credited this week. The slow and phased release of the funds have been attributed to various dates that each company submitted and reconciled its deposits in the escrow account.

 

But, the effect of the funds being released are being felt with the continued rise in the prices of quoted insurance stocks. And stockbrokers already foresee a more bullish market in the sector in the coming months with expectations of dividend payout and bonuses.

 

However, most insurers say the expected investment income that such funds would have accrued if invested in premium equity have been lost more than 8 months that the funds have been kept in CBN. Some have been under intense pressure from clients and brokers to prove that they raised money before they could be given business.

 

Currently, insurers are using their funds to either negotiate insurance deals with banks who are pressing for the deposits to be placed with them or depositing with banks that have given them business in the past. It was gathered that banks are muscling their way to win insurers’ deposits or selling shares to them while CEO’s believe this is the time to get the best from any deposit or shares they get.

 

In a move to reassure their customers and shareholders, companies that have received their funds and those expecting to get theirs are restating their promise of giving shareholders value for their money. After a protracted crisis that engulfed the industry, the national Insurance Commission found it difficult to effect the release of the funds, even after the verification was concluded, but things changed with government’s intervention.

 

 

 

Insurers have argued that monies paid into the escrow account in CBN was not part of the claims in court by any of the parties.

 

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