NAICOM obeys court order, suspends recapitalization exercise
As a result of an interim injunction by an Abuja High Court that the ongoing recapitalization exercise in the nation’s insurance industry should be suspended, the industry’s primary regulator, the National Insurance Commission (NAICOM) has suspended the exercise.
This is the second time the NAICOM had to halt a recapitalization exercise as a result of court order emanating from a court case instituted against NAICOM in its drive to raise the industry’s capital base.
In 2018, NAICOM had to cancel and withdraw the then Tier-Based Minimum Solvency Capital (TBMSC) as a result of a court order emanating from the case instituted against NAICOM by the Independent Shareholders Association of Nigeria (ISAN).
Recall that the House of Representatives has during the week written to NAICOM seeking the suspension of the industry’s recapitalization for six months to allow the industry’s operators time to absorb the impact of latest economic challenges such as the COVID-19 gPandemic and #EndSARS protest.
According to the House of Representatives, “the suspension is expected to last for six months from January – June 2021 and is necessary to give the insurance operators soft landing, as well as cushion the effects of Covid-19 and other unforeseen circumstances they might have suffered.”
Although NAICOM is yet to issue official statement to this effect, the spokesperson of NAICOM, Rasaaq Salami, in a telephone conversation yesterday confirmed the development.
He said: “You are aware that the issue is in court and there is an interim order of the Court. NAICOM been a responsible and law abiding organisation will respect the order of the court.”
Salami also noted that NAICOM had responded to the letter written by the NIA where the association sought clearifications on uncertainties surrounding the ongoing recapitalisation.
The NIA had in a letter entitled: Segmentstion of Minimum Paid Up Share Capital of Insurance Companies in Nigeria: Appeal For Waiver of December 2020 Milestone, signed by the Director-General NIA, Mrs. Yetunde Ilori, implored NAICOM to respond to its request for waiver of the December 2020 deadline for first phase of the recapitalisation exercise.
The association posited that the continued silence by the commission on its position is of serious concern to operators. “This is underscored by a fast-approaching deadline and everybody is being kept in a suspense, which is not helping the market at the moment,” it said.
NIA asked NAICOM to kindly respond to its letter and provide a position on other matters to properly guide the operators and all other stakeholders, thereby putting an end to unintended speculations and uncertainties surrounding the ongoing recapitalisation exercise.
