The federal government through the National Insurance Commission (NAICOM) is considering the sale of some of four rescued insurance companies to willing investors, as part of effort to salvage the interest of the teeming insurance policyholders and shareholders, LEADERSHIP can exclusively report.
The rescued insurance companies are those insurers that are currently under the NAICOM's intervention and they include: Goldlink Insurance PLC, Spring Life Assurance Plc, Industrial and General Insurance (IGI) Plc and International Energy Insurance(IEI) Plc, while the case of Alliance & General Insurance and Alliance & General Life Assurance Plc, is already in court.
Virtually all the four insurance companies have consistently for more than three years posted negative results, having negative shareholders' funds, an indication that all is not well with the underwriting firms.
Despite the rescue mission of NAICOM, the companies did not fare any better, as they continued to struggle to survive. Investigation revealed that one of the aforementioned companies was even owing two month salary arrears as it stands, a signal that the company was in troubled waters.
While virtually all stages of recovery have been deployed by the Commission in the management of these companies, it seems IGI Plc was the only one responding to treatment and may soon get its freedom back. In the 2016 financial year, International Energy Insurance (IEI) Plc has capital base to the negative of -N2.12 billion, needing N5.12 billion to get to the required minimum capital base of N3 billion while Goldlink Insurance Plc shareholders fund was already in negative of N-4.25 billion.
With the fear that the concerned insurance firms may go under, the Commission is currently in talks with the major investors of three of the affected insurers on the need to sell off the companies. However, the challenge now is managing the companies to the level of profitability to be more attractive to willing buyers.
And with recapitalisation expected to commence soon at a time these insurers are already operating a negative shareholders' fund, the regulator think the best option available for these companies to survive is to attract investors who can pump in money to stabilise the firms.
Confirming the development in an exclusive interview with LEADERSHIP recently, Deputy Commissioner for Insurance, Mr. Sunday Thomas said, there are different tiers of regulatory intervention and that there are several ways to recovery, disclosing that the regulator is trying to manage some of them to a profitable level and hand them over to investors.
When asked about the possible sale of these firms, he said: "Of course, offering some for sale is also an option to recovery, but we are on the verge of handing over some of them to investors." The interest of policyholders, according to him, is germane to the Commission and that it will do everything possible within its regulatory purview to ensure that no insurance company goes under.
Speaking on behalf of shareholders in an interview with LEADERSHIP at the weekend, the President, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie, said, it is disheartening that the management put in place by NAICOM to rescue these companies were actually the one mismanaging them.
He noted that the situation of the companies have gone from bad to worse, from the point the Commission took over them and now. He implored the regulator to go after the previous managements who mismanaged these companies, charge them to court and make them repay what they have stolen from these firms to return those companies back to profitability.
Okezie, however, called on NAICOM to carry along the public shareholders in whatever things they are doing in those companies, and must let the public know the discovery of the current management about how the companies were initially mismanaged by the previous board.
According to him, "why has NAICOM not been able to prosecute the previous management who ran these companies aground, since it's a case of fraud? Every year, IEI is reconstructing shares, yet these reconstructions have brought nothing to the company. It is not only peculiar to IEI alone, we expect the regulator to rake in those management who ran the companies aground.
"If they have stolen fund, let them return it so that shareholders can have their shareholders fund back. You don't just sack them alone, they must be brought to book. NAICOM must charge them to court for fraud. But they are still walking around without any fear," he pointed out.
NAICOM, had in 2011, intervened in the management of Goldlink Insurance Plc, Spring Life Assurance Plc, A& G Life and A& G General by taking over the board of those companies, after the Commission noticed a breakdown of corporate governance, financial mismanagement, corruption cases, among others.
Then, the management of A& G Life and A& G General took NAICOM to court to restrain the Commission from intervening in those firms and up till now, the case is still in court. But as it stands, the case of the two firms is even worse than the other four companies as they seem to be losing the market to their competitors.
Later, NAICOM also took over the management of Industrial and General Insurance (IGI) Plc and International Energy Insurance (IEI) Plc over what the regulator termed breakdown of corporate governance, hence, placed restriction on their financial expenses, as they were made to get approval from the Commission to spend any amount above N200,000.