Recapitalisation: Shareholders seek deadline extension for insurers

The Progressive Shareholders Association of Nigeria (PSAN) has appealed to the National Insurance Commission (NAICOM) to extend the recapitalisation deadline for insurance companies that have yet to meet the new requirements.

PSAN chairman, Boniface Okezie, made the appeal in an interview on Saturday in Lagos.

About 50 insurance companies successfully recapitalised within the one-year timeframe, while eight others failed to meet the requirement.

The development comes as NAICOM begins processes to revoke licences of companies that failed to recapitalise.

Mr Okezie congratulated the 50 companies that successfully aligned with the recapitalisation requirements, but urged NAICOM to consider firms making genuine progress.

He called for a five- to seven-month extension for companies that had demonstrated commitment and were already raising funds through the capital market.

“Some of them have raised N5 billion, N3 billion or N7 billion and thereabouts. They should be allowed to complete the issue,” he said.

Mr Okezie said companies with willing investors should be given an opportunity to complete fundraising and meet the recapitalisation requirements.

“Even if they have found investors who are willing to invest in them, they should be given the opportunity to raise the money,” he said.

He warned that withdrawing licences from companies making genuine efforts could hurt shareholders and investors whose funds remained tied up in affected firms.

“When two elephants fight, it is the grass that suffers. In this case, the investors are the ones who will suffer,” Mr Okezie said.

He urged NAICOM to consider shareholders’ interests in regulatory decisions, stressing that investors should not bear the consequences of corporate failures alone.

“We cannot continue that way. Are we encouraging local investors or discouraging them? That is the question we are asking,” he said.

Mr Okezie said the insurance industry should not be treated like the banking sector because investors’ appetite for insurance stocks remained relatively low.

“Insurance companies are not banks. We cannot compare the two industries,” he said.

He attributed weak investor appetite partly to challenges surrounding dividend payments and past experiences involving insurance companies.

“When banks come to the market, everybody will rush to subscribe, but that is not the same with insurance companies.

“The insurance industry is lagging behind partly because of non-payment of dividends,” he added.

Mr Okezie said some investors had held insurance stocks since 2007 and 2008 without receiving dividends from certain companies.

He expressed concern about shareholders whose funds were trapped in companies unable to meet regulatory requirements, warning that licence withdrawals could weaken confidence.

The PSAN chairman also raised concerns about Niger Insurance shareholders following its liquidation and the appointment of a receiver.

He said investors should receive adequate protection, while supporting licence withdrawals for companies that showed no commitment to meeting recapitalisation requirements.

“We do not want additional liquidity problems. Those who are not serious enough to meet all the requirements should have their licences withdrawn.

“But those who are serious and have made efforts should be given ample opportunity to complete the process,” Mr Okezie said.

He urged NAICOM to adopt a balanced approach that protects investors while ensuring only viable and adequately capitalised insurers remain operational.

Mr Okezie said such an approach would strengthen confidence in the insurance industry and encourage greater participation by local investors.

Similarly, Moses Igbrude, national coordinator of the Independent Shareholders Association of Nigeria (ISAN), urged NAICOM to consider rescuing affected firms.

Mr Igbrude suggested that companies unable to meet the deadline could receive an additional six months to raise capital or secure strategic investors.

“Why not give them some more time, like six months, to recapitalise if they can? If they cannot do it, then you can take necessary action,” he said.

He described immediate liquidation as a harsh approach that could leave workers jobless and shareholders at risk of losing their investments.

Mr Igbrude suggested that NAICOM identify viable companies among those that failed to recapitalise and appoint new management or directors.

He said the affected firms could then be given a defined period to secure co-investors capable of injecting fresh capital.

“This will save jobs, shareholders and other stakeholders, while also reducing the rigours associated with liquidation,” Mr Igbrude said.

He stressed the need to preserve viable businesses, employment opportunities and investments by allowing deserving companies to attract fresh capital.

“If two, three, four or five of them can be rescued, let them source for investors who can recapitalise them,” he said.

Meanwhile, Adetutu Shiyanbola, chairperson of the Highly Favoured Shareholders Association of Nigeria, expressed disappointment over the development.

“I am not happy about the development, but since the government has taken a decision on it, there is nothing I can do.

“It is a sad one for those who were unable to recapitalise,” Shea said.

(NAN)