The Chartered Institute of Stockbrokers (CIS) has advised recapitalised insurance companies to see the successful exercise as the beginning of a new phase rather than its end.

Dr Benneth Eze, Head of Research and Development, CIS, gave the advice in an interview with the News Agency of Nigeria (NAN) in Lagos on Sunday.

Eze said the companies should prioritise protecting shareholders’ capital and resist the temptation to pursue rapid expansion simply because of their stronger capital positions.

“My advice to recapitalised insurance firms would be simple: do not treat recapitalisation as the destination; treat it as the beginning of the next phase of the industry,” he said.

He urged insurers to focus on underwriting discipline, effective claims management, operational efficiency and risk-adjusted returns.

According to him, insurers should prioritise the quality and profitability of business underwritten rather than the volume of business written.

“The relevant question now is not merely, ‘How much business can we write?’ but, ‘How much profitable business can we underwrite while maintaining appropriate risk and capital discipline?’” he said.

Eze also urged the boards and managements of insurance companies to maintain transparent communication with shareholders on how the fresh capital was being deployed.

He advised investors to monitor the returns expected from the additional capital and the indicators being used to measure the companies’ performance.

The CIS official said investors should assess recapitalised insurers based on their fundamentals rather than the success of the recapitalisation exercise alone.

He listed earnings quality, return on equity, solvency, asset quality, liquidity, underwriting performance, corporate governance, dividend sustainability and valuation among the key indicators investors should monitor.

“That is the evidence that will ultimately determine whether the recapitalisation has created lasting value,” he said.

Eze further advised insurers to invest in human capital, technology, data and distribution channels, describing them as critical to building sustainable competitive advantages.

“Regulatory compliance is only the minimum standard,” he said.

He said the real test of the recapitalisation would emerge over the next several reporting periods, when investors would determine whether stronger capital bases were translating into improved underwriting results, sustainable profitability, competitive returns on equity and better claims outcomes.

Eze said the ultimate measure should be whether the exercise was creating greater value for shareholders.

He urged insurers to leverage their stronger balance sheets to deepen insurance penetration by developing products that address genuine household and business risks.

According to him, this will strengthen the broader economic benefits of recapitalisation through improved risk transfer, increased investment and greater financial protection for households and businesses.