The NSE Insurance Index, which tracks insurance stocks, recorded the highest gain of 29.77 per cent in January, 2021. This is even as insurers rallied on the back of suspension of insurance industry recapitalisation exercise, LEADERSHIP can now reveal, Federal government had in December 2020, through the National Insurance Commission , suspended the insurance industry recapitalisation exercise following court order mandating the regulatory body to do so.
Capital market analysts said that the driver is likely the recent recapitalisation efforts that have dominated the sector since 2019. NAICOM, had, earlier stipulated 31st of December, 2020 as the deadline for underwriters to have raised 50 per cent of the new capital while the remaining 50 per cent would be expected by September, 2021.
However, the ravaging COVID-19 pandemic forced the regulator to move the deadline to September 20202 but insurance firms were required to meet half the recapitalisation requirement by the end of December 2020. Also, analysts expected a flurry of public offers, acquisitions, divestments to dominate the insurance sector in 2021, saying “As charter around potential deals dominates the rumour mills of the market, insurance stocks will increase in demand. As usual, investors are advised to pick choose wisely.”