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Finance | Insurance

Could We Have Saved UNIC Insurance?

Apr 27, 2021   •   by   •   Source: Proshare   •   eye-icon 1456 views

Tuesday, April 27, 2021  / 8:09AM / OpEd By Ekerete Ola Gam-Ikon / Header Image Credit: Ecographics 


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On April 21, 2021 the National Insurance Commission(NAICOM) announced, quite awkwardly, that with effect from March 25, 2021 ithad cancelled the operational licence of Unic Insurance and appointed aReceiver/Liquidator who will be responsible for winding up the Company. Thus,the memories of generations of insurance professionals, practitioners,policyholders, financial advisers, consultants, suppliers and indeed,regulators had been sent to the dustbin of history, particularly, of theinsurance industry in Nigeria and Africa.

 

Related Link: NAICOMIssues Public Notice on the Cancellation of Operational Licence of UNICInsurance Plc - Apr 22, 2021

 

To many industry analysts, the regulatory action hadtaken a long time to come and if we must have insurance companies that thepublic would not have to ask too many questions before taking up policies,NAICOM still has a lot of work to do regarding other insurers that may be in asimilar position as Unic Insurance (formerly Unic Insurance Plc). The questionon every lip now is: When will that of Company X be done? 

 

It is important to understand that such regulatoryaction, which is often the last resort, would be necessary to draw attention tothe insurance industry and force the public to ask questions and get answersthat will provide clarity and reassurance about insurance operations, andhopefully put confidence in more people that are interested in seeing astronger insurance sector.

 

Unic Insurance WasUnique

Before attempting to answer the question that is thetitle of this op-ed, I will like us to appreciate some unique milestones ofUnic Insurance.

 

April 2, 1965

Incorporated as a Private Limited Liability Company

October 1, 1965

Commenced General and Life Business activities

February 27, 1990

Listed on the Nigerian Stock Exchange

February 28, 2007

Terminated its General Business operations due to the recapitalization exercise of NAICOM and was left with only the Life Business

February 2017

The acquisition of Unic Insurance Plc by Liberty Holdings of South Africa was announced

April 2017

Delisted from the Nigerian Stock Exchange

August 2017

Shareholders of Unic Insurance Plc officially became owners of a new company named Unic Diversified Holdings Limited

March 2018

NAICOM announced its take-over of Unic Insurance "to rescue the Company from distress".

March 25, 2021

NAICOM announced cancellation of the operational licence of Unic Insurance and appointed a Receiver/Liquidator to wind up the company.

Subsidiaries

1.    Critical Rescue International

2.    VGC Recreational Investment Trust Limited

Financial Highlights As At December 31, 2014

Shareholders with more than Five percent of the Issued Share Capital:

a.    Clad Limited - 14.67%

b.    Volker Securities Company Investment Limited - 12.44%

c.    Greville Investments Limited - 5.87%

 

Total Assets - N4,387,483,000

Total Equity - N1,042.495,000

Gross Premium - N57,997,000

Loss after Taxation - (N567,863,000)

 


Did you observe that the cancellation of theoperational licence of Unic Insurance came exactly 55 years after itsincorporation on April 2, 1965? This is also exactly 3 years after NAICOMappointed its Board and Management to rescue a company which had CriticalRescue International as one of its wholly owned subsidiaries. It could not havebeen intentional for the Company to have its moments of change in either Marchor April. Were this mere coincidences or orchestrated actions? There arejust too many questions that need answers even as many insuranceprofessionals who had stints at Unic Insurance have been deeply saddenedby this development. 

 

In my view, however, I enjoined us not to cry for UnicInsurance as it has become the first confirmed case of both a badly managed andpoorly regulated insurance company in Nigeria since the 2007recapitalization. I reiterate that we should be more concerned about othersthat may be in similar dire conditions, hence the need to answer the themequestion: "Could We Have Saved Unic Insurance?"

 

Unic Insurance Plc, obviously, went through morechanges since the 2007 recapitalization than it did from its inception up untilthe recapitalization? What was responsible for these rapid changes especiallywhen the ownership remained till the latest announcement of NAICOM while theBoard and Management changed a number of times culminating in the one appointedin 2018 by the regulator. The assignment given to the Board and Management byNAICOM was short and specific, as captured in a News Agency of Nigeria reportof March 2018: "The Commission gave Ordu and his team six months to do aforensic audit of the financial position". It continued "Forensicaudit would be carried out on the corporate governance failures observed in thecourse of reviewing the financial statement of the company".

 

It is therefore clear that the decision of NAICOM tocancel the operational licence of Unic Insurance is neither based on thefallout of the recent recapitalization nor the calls for actions against ownersand managers of insurance companies that have become unable to meet theirfinancial obligations to customers, employees and shareholders. The case ofUnic Insurance is different!


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Why the Regulators CouldNot Save Unic Insurance...

When the respected former Head of the Interim NationalGovernment, Chief Ernest Shonekan took over United Nigeria Insurance Company,it was one of the prized heritage of the insurance industry in Nigeria andAfrica especially because most distinguished insurance professionals had beentrained there and had a great memory of the company, which was also the nextthing after the "almighty NICON" owned and promoted by the FederalGovernment of Nigeria. Chief Shonekan understood this quite well and envisionedto remake the Company into the best in Nigeria leveraging his impressionablerelationships and expansive global business network.

 

Under his leadership, Unic Insurance chose to focus onLife and Health Insurance, and became Nigeria's first advanced paramedic(emergency medical services) company, then one of the first to have analliance with BUPA, one of the leading global health providers. With itssubsidiary, Critical Rescue International, which was affiliated with a SouthAfrican Company, Unic Insurance went into partnership with V-Mobile (nowAirtel) to sell health insurance to mobile phone subscribers. Years later,envisaging the connection between health insurance and healthy lifestyle, UnicInsurance established a subsidiary, VGC Recreational Investment Trust Limited,owners of VGC Recreation Club.

 

Interestingly, Unic Insurance had always had a richBoard with renowned experts in financial and insurance matters and theyattracted foreign insurance professionals to hold critical roles as ChiefExecutive Officers and Finance Directors, probably due to the affiliations theyhad.

 

As the company was repositioning to lead the market,it became attractive to the global insurance brands that were interested in theNigerian market and it was no surprise that Liberty Holdings of South Africacame in to conclude the multimillion dollars acquisition of over 70 percent ofthe shareholding. Did the owners of Unic Insurance Plc go to the Capital Marketunder the dutiful eyes of the Nigerian Stock Exchange (NSE) and NAICOM in 2017to float the shares of Unic Diversified Holdings, a company that wasincorporated in September 2015 to give Unic Insurance away but keep the newentity as a financial services provider? Chief Shonekan must have been excitedthat this was ending well but quite shockingly the deal did not fall throughand, like they say, the rest is history.

 

It is still indiscernible how the Unic Insurance Plcwe knew became so troubled that it disappeared from Marina and later from ObaAkran Avenue and now to the memory lane, This is one case the regulatorscreated and ate up.


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Why The Regulators WillWait Longer

It may be plausible that the owners of Unic Insurancegot tired of running the insurance business after their attempt to deliver itto Liberty Holdings of South Africa failed, thus enabling the regulators tocancel the operational licence of the company after only three years ofappointing a new Board and Management. However, industry watchers are eager toknow the outcome of the forensic audit "carried out on the corporategovernance failures" and how they could serve as a deterrent to otherinsurance companies, especially the ones that have been run by the Boards andManagement Teams appointed by NAICOM whether over five years ago or last year.

 

Will any persons whether as Members of the Board orManagement be questioned, charged or prosecuted for the "failures observedin the course of reviewing the financial statement of the company", inthis case, Unic Insurance?

 

Nigerians need to have confidence in the insurancesystem especially in times of dire uncertainty as we have found ourselves, andthe roles of the regulators have to be reassuring and trustworthy. If NAICOMcannot determine the cases of the companies under its management or regulatoryorder, which have been repeatedly mentioned by members of the public that areowed claims, it should at least use the strength it had found to deal with UnicInsurance, to HELP those that have claims get their payments without furtherdelay.

 

The longer the regulators wait, the more difficultthey make the work of mainstreaming insurance and risk management into thestructure of governance. Unfortunately, the idea that has been sold, lately,that the passage of the new Consolidated Insurance Amendment Bill is what isrequired to address the problems that recalcitrant insurers are causing willnot compensate for the time Claimants have had to wait for their unpaid claims.Even if the bill is passed today and signed into law by the President tomorrow,we know that putting the instruments for the implementation takes time and thiscase is unlikely to be different, especially as opponents of the changes to beintroduced are actively lobbying.

 

Until we have 55 out of 55 insurance companieslicensed by NAICOM to operate in Nigeria without any reservations from thepublic, then we will understand the commendation some analysts want us to givethe regulator. When people know that any insurer that violates the agreementwith a policyholder will be penalized or sanctioned by the regulator, that iswhat we mean by having 55 out of 55.

 

Despite Digital Speak

We have chosen the long road despite the advantagedigitization offers, but we can decide to improve our communication within andoutside the insurance industry in Nigeria just as the Chartered InsuranceInstitute of Nigeria espoused in its periodic publication recently. Ignoringmessages from pained claimants and policyholders remain the greatest damage weare doing to the image of the insurance industry into the future.

 

In a time that we can use all kinds of enabledapplications developed within Nigeria to communicate, we are challenged toreset our priorities to ensure we can attract more of the uninsured only bysatisfying the insured.

 

Let us do what is necessary to save the next companyto avoid giving it the Unic Insurance treatment.


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About The Author 

Ekerete Olawoye Gam-Ikon, MNIM,CPP, is a management consultant with a specialization in Strategy andInsurance. You can contact him via e:mail ola[email protected] and mobile +234-806-648-1111 

 

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Related News on Unic Insurance Plc

  1. NAICOM Issues Public Notice on the Cancellation of Operational Licence of UNIC Insurance Plc
  2. Unic Insurance Plc announces resignation of Mr. Ernest Ebi Chairman of the Board
  3. Unic Insurance Plc appoints Ernst and Young as the External Auditors
  4. UNIC Insurance Plc releases Q2 '11, Q1 '11 & Audited '10 results with N102.6 million loss in Q2.
  5. Unic Insurance Plc: Annual General Meeting
  6. Unic Insurance Plc releases Q1, Q2 & Q3 2010 results with N357.85 million PAT in Q3.
  7. Unic Insurance Plc declares N556.51 million loss in 2009 Audited result.
  8. UNIC Insurance plans for capital market


Proshare Nigeria Pvt. Ltd.


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 Proshare Nigeria Pvt. Ltd. 

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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