Shareholders in the insurance industry have rejected the change in the recapitalization deadline given to underwriting firms to recapitalize from January 1, 2019 to October 1, 2018.
Some of the shareholders, who spoke with our correspondent in separate interviews, said while they were not opposed to the recapitalization of the insurance companies, they totally opposed the deadline of barely one month given to them to recapitalize.
They also kicked against the requirement that stated that the 2017 solvency accounts of the companies should be presented for the recapitalization, when the announcement was only made on August 28, 2018.
According to them, the inconsistency in the policy of the regulator and hasty move to conduct the sector’s recapitalization may cause some insurance companies serious problems and have negative effects on the economy.
The shareholders, who observed that the new development was causing panic among the operators, said it might affect confidence in the industry if some companies collapse as a result of the inability to renew their treaties.
The Chairman, Nigerian Constance Shareholders Association, Malam Shehu Mikail, observed that many insurance companies were making frantic efforts to recapitalize to tier one. He said instead of a hasty exercise, the commission should concentrate on confidence building and how the companies should clean up their bad loans.
“It is better for NAICOM to extend it to the next one year after the country’s election period is over,” he said. He said the recapitalization should not be done in a way that could demoralize the staff of the companies, but that NAICOM should ensure that they paid claims.
Mikail said, “I believe it is better for the commission to reverse the deadline and liaise with the insurance companies on how to have a real approach. It will make insurance companies to start doing well, and increase confidence of investors.”
Speaking in the same vain, the Chairman, Progressive Shareholders Association, Boniface Okezie, said that the change in date showed inconsistency on the part of the regulator. “How can NAICOM give one month for companies to plan recapitalization? Even if they give them one year, it is not good for recapitalization; you need to give them adequate time. Some of them are selling shares; who is buying it?”
According to him, NAICOM should go back to the drawing board and help the companies to rise up because they need support to thrive. “NAICOM should give a timeframe. This fire brigade approach cannot work. It will drag the economy back if insurance companies go down today; people will lose billions of investment in that sector.
“NAICOM should be concerned about how to get insurance stocks to bounce back and have value. The October deadline is unacceptable.” The Managing Director Lancelot Ventures Limited, Adebayo Adeleke, said it was not the best thing for regulators to be changing regulations.
He said, “They must have thought through the entire tier recapitalization process before coming out to say this is the way to go. They came out and mentioned January 1. Barely three weeks after, are they changing the goal post. That is not even good for the image of the regulator that wants to be taken seriously.”
He said the commission noted that the recapitalization would be based on the audited account of 2017.
Adeleke explained that NAICOM would use the solvency capital of each of the insurance companies as at the last audited account and most of the insurance companies would present December 2017 account, and a few would present 2016 account. “This one is more like a military style and it is more or less like a back-dated issue for that matter,” he said.