Fresh crack that reveals a disquiet in the ailing Industrial and General Insurance (IGI) Plc appeared last week following the complaints to two regulators by some minority shareholders, in what is described as last-minute efforts to save the company from going under.
IGI is currently plagued by crises occasioned by liquidity problems and declining fortunes that have sent it crashing, leaving it to struggle for survival.
Four minority shareholders namely: Signet Ring Realty & Investment Limited, Adeyinka Adedeji, Hakeem Animashaun, and Olayinka Olajuwon approached both the National Insurance Commission (NAICOM) and the Securities and Exchange Commission (SEC), accusing the board and the management of the underwriter of assets stripping, and also, complaining of being sidelined in the management of the ailing company which they said, has failed to render accounts to its over 10,000 shareholders in the last five years.
The minority shareholders have by this action, put on the spot, the board of the company led by the former Secretary to the Government of the Federation, Mahmoud Yayale, and the Rachel Voke Emenike-led management of the company which has not held an Annual General Meeting (AGM) in the last five years, thus contravening the rules guiding public entities.
Efe Ebelo, spokesperson for SEC told InsideBusinessNG that she will find out about the shareholders’ complaints when contacted on Sunday night.
“Unless I find out. I will do and revert please” she stated.
Similarly, Rasaq Salami, spokesperson for NAICOM said he was not aware of the development.
“I am not aware, I am still on vacation”, Salami said in a text message on Monday morning.
Findings by InsideBusinessNG showed members of staff of the company are also disgruntled over several issues including the controversial sale of the assets which they said the application of the proceeds has not addressed IGI’s huge claims overhang and also, the huge staff outstanding salaries.
According to the record sent to NAICOM in July, the outstanding claims is around over N4 billion while as of August this year, the staff were owed about 21 months salaries depending on the cadre.
In an 18 October letter entitled, “Complaints Against Acts Of Prejudice By The Board of Directors of IGI”, and signed by Oluwatoyin Adekoya, the Managing Partner, S.O & C Legal, to the Director-General of SEC, the four minority shareholders alleged arbitrary, wrongful, oppressive, and unlawful acts against the board and management of IGI.
In the letter that was also sent to the insurance regulator, the National Insurance Commission (NAICOM), the shareholders alleged that the IGI board in the last four years has shown utter disregard for the provisions of various laws guiding public companies in the country.
Specifically, they accused the board of “Lack of transparency in the manner with which the company is being run, no accounts are rendered and all efforts to access the state of affairs of the company in the public domain have been futile”.
“It has been over four years since the company held an Annual General Meeting (AGM)” and the shareholders said non-convention of another contravened the provisions of the Companies and Allied Matters Act (CAMA).
They also accused the board of running the affairs of the company in secrecy from its investors, stating that this is against the “utmost good faith principle” on which an insurance business thrives.
The management was also accused of deviating from the core business of insurance, and now, into real estate, citing the sale of the real estate assets of the company including the 4.2 hectares of land (Leisure Land Theme Park) at Maiyegun Tourism Scheme, Lekki in Lagos.
The shareholders in the letter also accused the board of “Frivolous expenditure on unverifiable and bogus consultancy claims, and agency fees particularly to Abdulkareem & Co and other firms to the detriment of the members of the company.
Mahmoud Yayale in a reply to InsideBusinessNG promised an appropriate response.
“I will liaise with the Management of IGI and arrange for appropriate response”, said the former SGF and Chairman, IGI on Sunday night.
On Monday morning, the managing Director, Rachel Emenike in a written response to the query from InsideBusinessNG waved off the assets stripping allegation but admitted that the company has not held an AGM in the past four years.
She attributed the non-convention of AGM in the past years to inherent problems in the company including backlogs of annual audited financial statements that the management currently grapples with.
“There is nothing like assets striping. The Company has a lot of real estate assets but came somehow illiquid” Emenike said.
This development affected the solvency margin capital and created a problem in the company’s ability to do business, according to Emenike who informed that the sale of the company assets falls in line with the approval of the regulator who had earlier, agreed on the sale of some assets.
“The regulator, NAICOM around 2016 approved a restructuring of the assets of the company by way of sale of some of them to create more liquidity which in turn will guarantee the Company to continue to be a going concern”.
She stated that the assets were sold to offset some claims and address some “other teeming stakeholders and to also guarantee the company’s going concern status.
Although Emenike did not highlight the application of the proceeds of the assets’ sale, she, however, hinted that the Company is still under a regulatory order and so nothing can be sold without the approval of the regulator.
“The Management and the Board are only carrying on the instructions of the regulator to create liquidity for the Company”, she said.
She admitted that IGI has not convened an AGM owing to some issues that were inherited by the current board but assured that, that will soon be sorted out.
The last AGM was held in 2016 during the tenure of Rotimi Fashola during which the 2014 audited financial statement was considered.
The audited financial statements for 2015 was still under NAICOM’s consideration when Fashola left in 2017 in what some insiders described as a palace coup, that also oust Sina Elushakin, the Executive Director, Technical & Special Risks.
Others that were also shoved out of the board include Yinka Obalade, the Executive Director, Finance and the daughter of the founder, Folusho Gbadamosi.
Bayo Folayan was seconded in 2017 from the IGI subsidiary in Uganda to take over from Fashola who is widely known in the industry as the lieutenant, and the right-hand man of late Remi Olowude, the founder of the company.
Between 2017 when Folayan held sway and 2019 that Emenike took over, and up till today, together with Tolu Delano, the Chief Finance Officer (CFO) who was appointed in 2019, the company has not held any AGM while no audited financial statement has also been approved according to findings by InsideBusinessNG.
“Indeed, the company has not convened AGM regularly, and this is due partly to some of the past issues inherited by the current board; not least some backlogs of some Audited Financial statements,” admitted the IGI Boss, Emenike.
The current board comprises Yayale, former Head of Service, and the former Head of the Civil Service of the Federation, Oladapo Afolabi, who have been there before the death of Remi Olowude. Four new members have been added and they are Kanayo Okoye, Gaffar Animashaun, Austin Olorunnisola and Emenike, the current managing director.
Apart from Emenike who is versed in insurance marketing and joining after leaving Old Mutual Assurance, others on the board are not known to have experience in insurance matters.
Findings also show that the board lacks a member with deep technical experience, which is the bane of insurance business.
“The Board has mandated the Management to round up all the Audits for the previous and current period to hold one AGM to clear all the backlogs”, stated Emenike who said the management has audited all the accounts up to 2020 and will be sent to the regulator for necessary approvals to pave way for an AGM to clear all the outstanding issues.
The AGM she said, “shall happen before the end of the third quarter of 2022”.
The petition to both SEC and the NAICOM followed the alleged refusal of the IGI board to heed the demand of the four minority shareholders in an earlier letter dated 20 May 2021, entitled “IGI Insurance Plc: Conduct of Affairs In Manner Oppressive To The Interest of Minority Shareholders”.
The quartet had in the letter signed by Oluwaseyilayo Ojo, the Senior Partner of S.O & C Legal, made a formal demand for an Extra-Ordinary General Meeting (EOGM) within 21 days from the 26 May of the reception of the letter for all the shareholders to know the current financial status of the company.
The complaints to SEC and the NAICOM by the minority shareholders which they said “is to ensure the company’s survival and growth”, came barely one and half months after NAICOM began the assessment of IGI’s compliance with the second Regulatory Order slammed on the underwriting firm on 8th July 2021.
The sector regulator had in an 8th September letter referenced NAICOM/RO/GCB/01/RIC-018 that was entitled, “Re: Regulatory Order”, demanded from IGI, the evidence of compliance with the settlement of all complaints from the commission and other outstanding claims of the company by 20th September.
In the letter signed by A. I Adamu on behalf of the Commissioner for Insurance, the regulatory body was specific on the evidence of the settlement of complaints as contained in the schedule attached to the Regulatory Order, and also, the evidence of the settlement of claims in the sum of N4,806,682, 256.56 contained in the submission by IGI to the commission via the email of 7th July 2021.
The 8 July regulator order which places IGI under certain conditions including a limit on expenditure and NAICOM’s approval on certain actions especially financials, came after the Nigerian Insurers Association(NIA) announced the expulsion of the company in a 23 June public notice.
NIA, the umbrella body for insurance underwriters in the country expelled IGI from its membership owing to its increasing default on obligations to its policyholders. The association also stopped the company that was hitherto, the flagship of the market from using its logo on its letterhead and other documents.
NIA’s action was the last resort having notified the company earlier but without concrete efforts by the management of IGI to address the association’s concerns.
The underwriters’ association also delisted IGI from its marine insurance platforms and also the Motor insurance platforms, denying it, of businesses from these classes of insurance, a situation that observers say has further plummeted the company.
The expulsion by NIA that is a critical stakeholder in the insurance market signal a deeper problem in the 30 years old underwriting firm.
A member of staff of the company who lamented the NIA expulsion told InsideBusinessNG that “Businesses have gone down in large numbers”.
Up till now, the NIA’s concerns have yet to be addressed by the IGI board.
IGI, until of late, is one of the flagships of the insurance industry and the first private insurer to hit billion Naira premium income after the hitherto government-owned Nicon Insurance Corporation. Lately, however, its state is an eyesore in a sector with fragile public confidence.
IGI was incorporated as a private limited liability company on 31 October 1991 and later re-registered as a public limited liability company in 2007. It started operation in January 1992 as a composite insurer to transact the business of Life and General insurance, including Pensions and Special Risks.
IGI, a major provider of insurance and risk management services in West Africa has subsidiaries, in The Gambia, Uganda, Rwanda and representative offices in London and Washington, DC.
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