NAICOM Lists Conditions for Payment of Dividends to Insurance Sector Investors

Ebere Nwoji

The National Insurance Commission (NAICOM) has listed conditions under which payment of dividends to shareholders in insurance shares will be made.

NAICOM said any dividend distribution shall be subject to submission of prior written application by the insurer and approval by the Commission.

It noted that all dividend payments shall be made from distributable profits, adding that an insurer shall not distribute or pay any dividend to its shareholders if it fails to comply with Section 24 and 25 of the Insurance Act, 2003; or the payment or distribution would result in it failing or being likely to fail to comply with Section 24 and 25 of the Insurance Act 2003; or it fails to satisfy any other prudential requirements.

Non-payment of dividends by some insurance firms has remained a battle shareholders have continued to fight. They often express anger over poor return on their investments in low performing insurance companies.

According to the shareholders, the most worrisome part is the usage of what would have amounted to the dividend being used for settlement of unnecessary fines.

Worried about their losses, they even threatened to commence the recovery necessary fine by some insurance companies from their management team.

The Coordinator Emeritus, Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu, at an insurance firm Annual General Meeting (AGM) implored underwriters to work assiduously to avoid paying careless fines.

According to him, due to the harsh economic situation in the country, it would be inappropriate for companies to pay fines due to carelessness, stressing that it is worrisome that at a time where shareholders are denied dividends, some companies pay huge sum of money as fine over things they have capacity to manage.

He noted that shareholders as owners of companies have rights to invoke the recovery of unnecessary fines from management who failed to do what is expected. Nwosu noted that regulators have in recent time demanded that shareholders take keen interest in the management of their funds without necessarily interfering with day-to-day management of the firms.