Standard Alliance challenges the suspension of its operating license and plans to sue.

Ibekimi Oriamaja Reports

Standard Alliance Plc, one of Nigeria’s insurance businesses, has protested the National Insurance Commission’s (NAICOM) decision to revoke its operating license, claiming that due procedure was not adhered to.
According to the rules governing the process of license cancellation, the insurance business accused the sector’s regulatory body of failing to wait for the Minister of Finance’s response to its appeal.

Standard Alliance Insurance Plc and one other insurance provider in the nation had their certificates of registration revoked, according to an NAICOM announcement from June.
It then named Kehinde Aina as the company’s receiver/liquidator despite the insurance company’s arguments for why it shouldn’t be liquidated and allegedly in defiance of the minister’s anticipated answer to wrap up the process.

Standard Alliance was served with a notice from NAICOM on March 28, 2022, alleging that the company was not operating in accordance with sound insurance principles. The commission noted that it had received and confirmed numerous complaints of failure to resolve admitted claims.
The regulator emphasized that this was a reason for the certificate to be revoked and pointed out that Standard Alliance had a large gap in both its assets cover and deficit solvency margin.
It further emphasized that the company had frequently missed the deadline for submitting its yearly accounts and did not have approved accounts that were current.

Please take note that the commission would move to revoke the company’s certificate of registration if a notice of appeal was not submitted to the Minister of Finance Budget and National Planning within 30 days of the notice’s date.
On April 12, Standard Alliance requested a review of NAICOM’s notification to cancel its registration in a letter signed by the company’s chairman, Johnson Chukwu.

“While we do not object to or argue the reasons for the intended cancellation listed in the aforementioned letter, we do think the timing of the decision is unfortunate given that our firm is about to successfully navigate its operating and recapitalization hurdles.

“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. “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.

Standard Alliance noted that investors were committed to stabilizing the company’s capital in the first instance by contributing equity in the amount of $8 million, or around N4.5 billion, as evidenced by the documents attached.
“The investors intend to restructure the company’s capital structure before bringing in further cash to sufficiently recapitalize it in order to meet regulatory capital requirements.

The company stated, “Therefore, it is our appeal that the Honourable Minister intervene to provide our company sufficient time to implement the accompanying SPA intended to place the company on a strong foundation.”
The company emphasized that extending the company’s time and collaborating with the new investors to revitalize the company would have a greater and more beneficial influence on the insurance market than revocation of the license.
The six geopolitical zones of the country each have a major city with offices for Standard Alliance Insurance Plc. More than 200 families, excluding extended families, receive a living income from it.

It manages annuities for retirees and is a publicly traded firm. If the company’s license is revoked, insurance claims and other stakeholders would be adversely affected, which will prevent the company from operating. Even worse, it will cause more harm to the insurance sector and could cause alarm among consumers who currently believe the sector is fragile. Therefore, we firmly believe that every opportunity to salvage the business should be supported.

In light of the board of the firm’s and committed Investors’ intention to recapitalize the company as evidenced by the legally executed SPA, documents obtained by THISDAY showed that license cancellation at this time should be avoided.

The company based its appeal on the need to safeguard the interests of policyholders and pensioners, who risk losing all of their benefits, the need to ensure the company’s survival, and the need to avoid the regulatory costs, efforts, legal fees, and complications that would be involved if the license were to be revoked.
It argued that taking into account its appeal will assist protect the industry’s image and reputation and prevent collateral damage, such as the loss of employment tax and other rights to important stakeholders.

It therefore pleaded with the minister to grant a 12-month window so that the SPA could be fully implemented and the company could be recapitalized by the new investors, promising to address all of the operational problems listed in NAICOM’s letter and put the business back on solid financial ground.
The company wrote a reminder on July 8 informing the minister that while it was waiting for a response from the minister’s office, its license had been canceled.

The news that our registration certificate had been revoked by NAICOM on June 28, 2022, came as a harsh shock to us as we waited for the Honourable Minister’s decision to our appeal and were prepared to meet all conditions necessary for the company to continue operating successfully.
The insurer stated, “And this is despite the identified investors’ willingness to invest and continue to run the business to the advantage of all stakeholders, including the government.

It emphasized that it was troubled that NAICOM did not at any point during that time consider it appropriate and necessary to invite them and the investors in relation to the appeal, which was copied to the regulator.

“Therefore, we humbly appeal once more to the Honourable Minister to use her good offices to intervene and respond favorably to our earlier appeal that is still pending 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 continued.
While awaiting the minister’s response, the receiver/manager wrote the insurance company and requested a report on the company’s situation prior to takeover.

Please provide the liquidators with a thorough report on the company’s current situation as well as hard copies and soft copies of any related papers from the departments of legal, accounting, information technology (IT), and human resources, among others.

“For this reason, the shareholders have chosen to file a lawsuit and challenge the injustice. As required by law, NAICOM didn’t even have the patience to wait for the Minister’s response to SA’s appeal.