Nigeria: Insurance Recapitalisation - Not Yet Uhuru - AllAfrica.com

Agha IbiamLagos

The out-of-court settlement reached between the Federal Soldier Government and NICON Insurance have not resolved the job the company is contending with as two companies, AAL and IGI are battling to see who goes the core investor in the coverage giant.

In the last few old age the Nigerian coverage industry have received considerable attention. A few old age ago, the public viewed coverage with contempt. This credibleness spread created not a little job for the sector. However, the consolidation of the banking industry made attending to turn to the coverage sub-sector. The recapitalisation moving ridge that swept through coverage saw a crisp decrease in the figure of coverage companies as many were forced to unify or be acquired by larger companies. The rest, as it is commonly said, is history.

However, in the last 1 twelvemonth until the recent out-of-court settlement, the Federal Soldier Government had been at stickers drawn with the Jimoh Ibrahim-led NICON Insurance management. Ibrahim a lawyer and investor in the oil and gas sector had gone to tribunal to dispute the powerfulness of the authorities to take over the direction of the coverage company from him. The National Insurance Committee (NAICOM) also took certain steps, such as as the suspension of the board and direction of NICON Insurance, the board of Federal Soldier Republic Of Nigeria Re-Insurance and the fundamental law of an interim direction and boards for the companies.

On one side too, the Industrial and General Insurance Plc (IGI) had shown involvement in purchasing the Federal Government's equity retention in the company and was declared the modesty bidder by BPE. The NICON Insurance direction led by Ibrahim that bought government's controlling shares viewed government's action as misdemeanor of the ownership construction and governing regulations of the companies as contained in the memorandum and articles of association of the companies and relevant laws and took the Federal Soldier Government to court.

In a release issued by NAICOM in Capital Of Federal Republic Of Nigeria on December 6, 2007, the committee gave a figure of grounds why it sacked the direction and boards of NICON and Nigeria Re. The committee noted that the place of the company's payables but not paid as at November 21, 2007, amounted to N12.2 billion. It added that these outstanding liabilities had been the topic of continued awkward ailments from clients and suppliers.

It said NICON used to have got one of the strongest reinsurance securities inch the coverage industry covering life, general business, aviation, oil and gas by the first re-insurer in the human race and other regional and local reinsurers. According to NAICOM, the prima reinsurers were forced to retreat screen to NICON followers the company's failure to settle down needed insurance premiums and the withholding of reinsurance recoveries paid in regard of claims of major clients like NNPC. According to NAICOM, the reinsurance contract for NICON was subsequently transferred to Federal Republic Of Nigeria Re.

Interestingly, according to NAICOM, all insurance companies were required by law to keep investing in specified instruments and keep a registry of such as investings in the principal topographic point of concern of the insurer. The committee accused NICON of breaching the Insurance Act by transferring all its investings and investible finances to a 3rd political party company, NICON Investing Limited largely owned by Ibrahim. NAICOM said through this company, NICON Insurance finances were transferred to other companies registered as NICON but not having common ownership with NICON Insurance Plc.

Concerning Federal Republic Of Nigeria Re, NAICOM stated that the company was registered to accept the hazards of reinsurance from all over the world. However, by a direction buy-out inch 2003, the Federal Soldier Government reduced its retention to 49 per cent. According to the commission, the 51 per cent direction buy-out was funded by commercial banks, which later assumed ownership of those shares as a consequence of failure of the directors to refund the loan. The shares later transited to individuals, corporate bodies, and the Jigawa State Government. The shares of Jigawa State Government were sold to Global Fleet in 2006.

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NAICOM said prior to the entry of Global Fleet, the corporation had made important attempts to beginning finances through confederation with a foreign coverage firm, which had signed an MOU for the injection of 50 million dollars and also a private arrangement in the Nigerian marketplace to shore up its working capital base. These efforts, the committee said, were set in suspension followers the entry of Global Fleet, with the promise of a fresh working capital injection. But it was only the Federal Soldier Government through BPE that injected a fresh monetary fund of one billion naira into Federal Republic Of Federal Republic Of Nigeria Re.

All these made the authorities to step in to salvage both NICON and Nigeria Rhenium from collapse. Government's intercession did not include inviting Industrial and General Insurance Company Limited, which ought to have got been the preferable bidder going by its statement of claim in a lawsuit it filed at the Federal Soldier High Court, Abuja. By a missive dated February 28, 2008, President Umaru Genus Musa Yar'Adua approved that the lawsuit instituted by Ibrahim against the Federal Soldier Government be settled out of court.

The footing of colony included: "that within a time period of 60 years of the origin of this agreement, the sum of money of money of N17.3 billion shall be injected by the shareholders, to ran into the funding spread and recapitalisation threshold to enable NICON Insurance obtain licence as a composite insurer; in regard of Federal Republic Of Nigeria Re, the sum of N7.3 billion shall be injected by the shareholders, in conformity with NAICOM's recapitalisation demands as a pre- needed to go on as re-insurers. Within 30 years of origin of this agreement, the complainants shall ask for the hearers to reconfirm the funding spread of N17.3 billion," the understanding stated.

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