Standard Alliance Kicks Against Revocation of Operating Licence, Heads to Court

*Says due process not followed by NAICOM

Emmanuel Addeh in Abuja

One of Nigeria’s insurance companies, Standard Alliance Plc, has kicked against the revocation of its operating licence, insisting that due process was not followed by the  National Insurance Commission (NAICOM), the industry regulator.
The insurance company accused the sector’s regulatory agency of failing to tarry for the Minister of Finance’s response to its appeal as required by the law guiding the process of cancellation of licences.

In June, NAICOM had announced that it had cancelled the Certificates of Registration of Standard Alliance Insurance Plc and one other insurance company in the country.
It thereafter appointed Kehinde Aina  as receiver/liquidator of the company despite reasons shown by the insurance company why it should not be liquidated and in alleged disregard for the minister’s awaited response to conclude the process.

In its notice to Standard Alliance dated March 28, 2022 NAICOM, had alleged that the company was not conducting its business in accordance with sound insurance principles, noting that the commission had received and verified various complaints of failure to settle admitted claims.
The regulator stressed that this constituted a ground for cancellation of the certificate, adding that Standard Alliance had significant shortfall in its assets cover and deficit solvency margin.
Furthermore, it stressed that the company had consistently failed to submit its annual accounts as at when due and did not have an up to date approved accounts.

“Please note that unless within 30 days from the date of this notice you lodge with the Minister of Finance Budget and National Planning a notice of appeal, the commission will proceed to cancel the certificate of registration of your company,” it stated.
On April 12, in a letter signed by Johnson Chukwu, Chairman of the company, Standard Alliance appealed for a review of the notification by NAICOM to cancel its registration.

“While we do not write to dispute or contest the grounds cited in the said letter as reasons for the intended cancellation, we however, believe that the decision is ill-timed as our company is all set to overcome its recapitalisation and operational challenges.

“Being aware of the capital shortfall challenge of the company, our board and management have been working very hard to attract new core investors who are able to bring in fresh funds to recapitalise the company and to also provide new leadership.
“Fortunately, our board has just signed a Shares Purchase Agreement (SPA) with a reputable group of investors, Endura Investment Global Limited, that will fully address the recapitalisation needs of the company,” it noted.

With documents attached, Standard Alliance noted that investors were committed to, in the first instance, stabilise the capital of the company by providing equity in the sum of  $8 million, about N4.5 billion.
“The investors plan to reconstruct the capital structure of the company, after which, they will bring in further funds to adequately recapitalise the company to meet regulatory capital requirements.

“It is therefore our appeal that the Honourable Minister intervene to give our company enough time to implement the attached SPA aimed at putting the company on a strong footing,” the company pointed out.
The company stressed that giving the company more time and working with the new investors to revive the company will have better and more positive impact on the insurance industry than cancelling the licence.
“Standard Alliance Insurance Plc has offices in major cities in the six geopolitical regions of the country. It provides living income to over 200 families excluding extended families.

“It is a publicly quoted company and manages annuities for pensioners. There are insurance claimants and other stakeholders that will suffer if the company is disallowed from continuing in business by the cancellation of its licence.
“Worse still, it will further damage the insurance industry and possibly panic the insuring public who may now fear that the industry is unstable. It is therefore, our firm belief that any chance to save the company should be encouraged.

“Surely cancellation of our licence at this time should be avoided in the light of the determination of the board of the company and committed Investors to recapitalise the company as represented by the duly executed SPA,” documents obtained by THISDAY showed.

The company based its appeal on the need to protect the interest of policy holders and pensioners, who stand to lose all their benefits, need to ensure the survival of the company, save regulatory costs, efforts, legal costs and complexities that would be involved if the licence is cancelled.
 It maintained that considering its appeal will preserve the image and reputation of the industry, help avoid collateral damage, which includes loss of employment tax and other entitlements to key stakeholders.

It therefore appealed to the minister to approve a 12-month period to allow for the full implementation of the SPA and recapitalisation of the company by the new investors, promising to address all the operational issues listed by NAICOM in its letter and restore the company to a strong financial footing.
When a response wasn’t forthcoming from the minister’s office, the company sent a reminder dated July 8, intimating her that while it awaited the response, its licence had been revoked.

“It, therefore, came to us as a rude shock that while we awaited the response to our appeal from the Honourable Minister, and were positioned to meet all requirements that will allow the company successfully operate going forward, we, on June 28th, 2022, received a letter from NAICOM that our Registration Certificate has been cancelled.
“And this is despite the readiness of the identified investors to invest and continue to run the company to the benefit of all stakeholders including the government,” the insurer noted.

It stressed that it was disturbed that for the period its appeal was lodged, NAICOM did not at any time during the period deem it fit and necessary to invite them and the investors in respect of the appeal which was copied the regulator.

“We, therefore, humbly appeal again to the Honourable Minister to use her good office to intervene and respond favourably to our earlier appeal that is still outstanding by granting us our request for 12 calendar months to fully implement the investment agreement with the investors who are still on standby and are still ready to fully capitalise the company,” it added.
But while the minister’s response was being awaited, the receiver / manager has written the insurance company asking for a report of the company’s state of affairs before takeover.

 “Kindly avail us with a comprehensive report of the state of affairs of the company as well as soft and hard copies of associated documents from the Legal, Accounting, Information Technology (IT) and Human Resources departments, amongst others,” the liquidators requested.

“This is why the shareholders have decided to go to court and fight the injustice. NAICOM didn’t even have the patience to wait for the response of the Minister to SA’s appeal as required by law,” a source told THISDAY.