This project is divided into different stages for ease of references of simplification of analysis which goes as follows: The introduction of mergers and acquisition, the background of the study which state the different problems that brought about mergers and acquisition which are the inability to settle claims, bad eggs in the industry, inability to bring up better services and innovative ideas that can enable the industry grow. Insurance has not been able to get to the rural area, it makes insurance non-popular profession that one must study, but since it has failed in this area, the common man find it difficult to know what insurance is all about. In order for the industry to stop the liquidation in the industry, the body called the insurance commission now brought about the means of mergers and acquisition to improve and uplift the industry to have an outstanding and stronger insurance in Nigeria, and I concluded that mergers will help the reliability and growth of insurance companies in Nigeria and also help them to settle claims. Finally I recommended that government should give more power to the commission of insurance to enable them carryout the task effectively in the country.




Merger is involved with the combination of two different companies to form one entity with the intension of achieving particular goal. While acquisition takes place when one company purchase the assets of another and inherits its liabilities. Mergers and acquisition was introduced into insurance industry due to their: INABILITY TO SETTLE CLAIMS; since the taste of a good insurance transaction lies in the manner in which claim is being handled by the industry, but majority of our insurance industries have failed due to lack of fund to settle or compensate their insured. And this leads to cost of disputes between the insurance and their policyholder and this area has impinge more on the image of an insurer and the insurance industry as a whole because most of the industries cajole their insured into paying premium when due, but slow down when it comes to paying claims. Reasons is because most of the industries don’t have sufficient funds or the investments that fetch money to enable them settle their clients, but rather formulates a thing or the other to wave the settlements. This has brought a bad name to insurance company as a whole as people call them name like selfish lots, sets a legalized cheats is a useless exercise to insure in Nigeria and that their clauses are hardly explained to clients while setting policies.

INABILITY TO BRING UP BETTER SERVICE AND INNOVATIVE IDEAS: The industry have not been able to encourage some new ideas/methods of operation that will enable the industry remain competitive and strong. Since there are still some rural areas where insurance has not touched, the industry has failed by not educating the common man of what insurance is all about and the benefits, for  instance, most of our tertiary institution don’t know insurance as a cause to study all because they feel the industry is full of fraudulent people. In village, they know nothing about insurance (ie.  to them such thing never exists) and some of them has never heard such words for the first time, infact most of our up-coming students look down on it as a course to study due to lack of knowledge.

INABILITY TO ELIMINATE BAD EGGS (IE. BAD AGENTS POOR MANAGEMENT): Most of the insurance agents are the bad eggs that should be eliminated. Some of the agents are not insurance agents they claim to be, but because of the money they are making from the business and this lead them to establish a mushroom insurance company without license in order to dupe people the more. This acts give bad name to the industry. Furthermore, most of the sole called managers, underwriters, brokers etc. lack basic academic and professional insurance knowledge, and as a result they do not contribute meaningful to the operations of the industry.


The subject matter of the research work borders on “Analytical study of mergers and acquisition in the Nigerian industry”. Below are some problem areas associated with the study;

· Effect of the possessive attitude of Nigerians to share even the whole business – “what I have hold syndrome”.

·  Effect of the complicated, cumbersome and expensiveness or procedure of mergers and acquisition which serves as legal vehicle for companies reconstructions.

·  Effect of double requirement of a majority in number and value for the approval of a scheme of arrangement.

·  Effect of the resource to the use of unorthodox means against dealing with directors who will be seeking to take away other people’s business instead of minding their own business.

The share capital base of insurance industry is as follows:

·  Life assurance –      N2 billion

·  General insurance –      N3 billion

·  Life and general –      N5 billion

The industry is given effect from February 2007 to meet up with their payments. As a result of this, most of the industries have gone into selling of their stock life shares in order to meet up with the payment to safeguard their company.


The major purpose of this study is to find out the possibility (if any) of insurance companies in Nigeria going into mergers and acquisition as an option for the achievement of better utilization of resources and viability of operation. The research will also find out and show weather substantial benefits will accrue both to the shareholder, employee and policyholder respectively, if such mergers and acquisition are carried out. Furthermore, the researcher tends to find out the implication such mergers and acquisition will have on the insurance practice in the country in the nearest future and beyond.


· Does mergers improve the operating efficiency of insurance company in Nigeria

· Does mergers and acquisition desirable for insurance companies in Nigeria.

· How does company merged with another company.

· Does merges and acquisition possible between insurance companies in Nigeria.


The significance of study are; It will enlighten shareholders and policyholders alike on mergers and acquisitions as an appropriate important and in some cases a fundamental instrument for dealing effectively with problem of failing insurance company as it limits the impact of insurance futures than outright liquidation. The study will also prove that a sound mergers/acquisition leading to significant economic of scale as well as rationalization of operations. It will enable the insurer to achieve good management and achieve diversification, strengthen the assets base and improve finance and liquidity position.


The research will therefore, be limited to Lagos, Enugu only, but no fewer than 50% of all registered companies shall be represented in the opinion pool/sampling. A research on the analytical study of mergers and acquisitions in the Nigerian’s insurance industry is a relatively new area. Hence information and data relating to the topic may be difficult to get (obtain furthermore, because of the wide spread of insurance companies throughout the federation it is obviously impossible to represent the view of every company due to lack fund, mobility and sufficient items.


(i)   Insurer: This is a person (party) who agrees in return for a premium to pay money to another person (party) known as the insured or assured on the happening of a stated environment.

(ii)  Policyholder: The policy holders are called insured, they are other party to the contract of insurance, which is entitled to be identified on insurance, or compensate in monetary terms on the happening of event contingencies insured against.

(iii) Insurance: It’s a social device providing financial compensation for the effect of significance. The payment being made from the accumulated contribution of all parties participating in the scheme (D.S. Hon)

(iv) Acquisition: Is when one company purchase the assets of another and inherits its liabilities.

(v)  Merger: It is combination of two different companies to form one entity with the intention of achieving a particular goal.

(vi) Fraudulent: This is a criminal deception to gain money or goods.

(vii) Liquidation: This is the winding up a company and divided the assets among its creditors.

(viii)  Insured: This is a person who is covered by the insured policy.

(ix) Underwriter: This evaluate the risk and exposure of potential clients. They decided how much coverage the clients should receive, how much they should pay for it, or whether even to accept the risk determining the premium that needs to be charged to insured that risk.

(x)  Adjustment: Its in-order to regulate or make suitable or convenient for one to see though something or have new conditions.