Could We Have Saved UNIC Insurance?

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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 it had cancelled the operational licence of Unic Insurance and appointed a Receiver/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 the insurance industry in Nigeria and Africa.

 

Related Link: NAICOM Issues Public Notice on the Cancellation of Operational Licence of UNIC Insurance Plc - Apr 22, 2021

 

To many industry analysts, the regulatory action had taken a long time to come and if we must have insurance companies that the public 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 a similar position as Unic Insurance (formerly Unic Insurance Plc). The question on every lip now is: When will that of Company X be done? 

 

It is important to understand that such regulatory action, which is often the last resort, would be necessary to draw attention to the insurance industry and force the public to ask questions and get answers that will provide clarity and reassurance about insurance operations, and hopefully put confidence in more people that are interested in seeing a stronger insurance sector.

 

Unic Insurance Was Unique

Before attempting to answer the question that is the title of this op-ed, I will like us to appreciate some unique milestones of Unic 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 the operational licence of Unic Insurance came exactly 55 years after its incorporation on April 2, 1965? This is also exactly 3 years after NAICOM appointed its Board and Management to rescue a company which had Critical Rescue International as one of its wholly owned subsidiaries. It could not have been intentional for the Company to have its moments of change in either March or April. Were this mere coincidences or orchestrated actions? There are just too many questions that need answers even as many insurance professionals who had stints at Unic Insurance have been deeply saddened by this development. 

 

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

 

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

 

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


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Why the Regulators Could Not Save Unic Insurance...

When the respected former Head of the Interim National Government, Chief Ernest Shonekan took over United Nigeria Insurance Company, it was one of the prized heritage of the insurance industry in Nigeria and Africa especially because most distinguished insurance professionals had been trained there and had a great memory of the company, which was also the next thing after the "almighty NICON" owned and promoted by the Federal Government of Nigeria. Chief Shonekan understood this quite well and envisioned to remake the Company into the best in Nigeria leveraging his impressionable relationships and expansive global business network.

 

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

 

Interestingly, Unic Insurance had always had a rich Board with renowned experts in financial and insurance matters and they attracted foreign insurance professionals to hold critical roles as Chief Executive Officers and Finance Directors, probably due to the affiliations they had.

 

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

 

It is still indiscernible how the Unic Insurance Plc we knew became so troubled that it disappeared from Marina and later from Oba Akran Avenue and now to the memory lane, This is one case the regulators created and ate up.


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Why The Regulators Will Wait Longer

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

 

Will any persons whether as Members of the Board or Management be questioned, charged or prosecuted for the "failures observed in the course of reviewing the financial statement of the company", in this case, Unic Insurance?

 

Nigerians need to have confidence in the insurance system especially in times of dire uncertainty as we have found ourselves, and the roles of the regulators have to be reassuring and trustworthy. If NAICOM cannot determine the cases of the companies under its management or regulatory order, which have been repeatedly mentioned by members of the public that are owed claims, it should at least use the strength it had found to deal with Unic Insurance, to HELP those that have claims get their payments without further delay.

 

The longer the regulators wait, the more difficult they make the work of mainstreaming insurance and risk management into the structure of governance. Unfortunately, the idea that has been sold, lately, that the passage of the new Consolidated Insurance Amendment Bill is what is required to address the problems that recalcitrant insurers are causing will not 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 this case is unlikely to be different, especially as opponents of the changes to be introduced are actively lobbying.

 

Until we have 55 out of 55 insurance companies licensed by NAICOM to operate in Nigeria without any reservations from the public, then we will understand the commendation some analysts want us to give the regulator. When people know that any insurer that violates the agreement with a policyholder will be penalized or sanctioned by the regulator, that is what we mean by having 55 out of 55.

 

Despite Digital Speak

We have chosen the long road despite the advantage digitization offers, but we can decide to improve our communication within and outside the insurance industry in Nigeria just as the Chartered Insurance Institute of Nigeria espoused in its periodic publication recently. Ignoring messages from pained claimants and policyholders remain the greatest damage we are doing to the image of the insurance industry into the future.

 

In a time that we can use all kinds of enabled applications developed within Nigeria to communicate, we are challenged to reset our priorities to ensure we can attract more of the uninsured only by satisfying the insured.

 

Let us do what is necessary to save the next company to 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 and Insurance. You can contact him via e:mail olagamola@gmail.com 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


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