–Act on NAICOM’s directives

By Peter OBIORA investadvocate

Sept 18 2010 07.00 GMT

 

 

Lagos–Spring Bank Plc has injected N700 million into its insurance subsidiary, Spring Life Assurance Plc. Sola Ayodele, Group Managing Director/Chief Executive Officer (GM/CEO) of the Bank confirmed this to Media Executives on Tuesday September 14 2010 at a forum held at the Bank’s Head Office in Lagos Nigeria.

 

 

The Spring Bank GMD affirmed that National Insurance Commission (NAICOM) had demanded that N1.2 billion be put into the insurance frim.

 

 

“NAICOM had demanded we put in N1.2 billion in Spring Life and we have funds coming in installments; which requires approval from the insurance regulators; because any funds that come in, the source of the funds must be traced” she said.

 

 

Ayodele further affirmed that NAICOM had given its approval for Spring Bank to inject money into the insurance firm in trances, “by December year 2010, the N1.2 billion will be complete; the N700 million put into the insurance company; amounts to about 75 percent of the N1.2 billion expected to be put into the company” the GMD said.

 

 

She also noted that NAICOM at a time required all insurance companies to recapitalise. “Spring Life was one of our subsidiaries and when we assumed office, the insurance company was not doing well, but we resolved that no subsidiary of the Bank will go under” Ayodele affirmed.

 

 

Following this, we approached NAICOM and informed them that we have a new team in the Bank and we appealed for time to turnaround Spring Life.

 

She had affirmed that funds would not be put in from the Bank to its insurance arm; but to get investors to buy into it. “As we speak, we have resolved the issue with NAICOM; investors have bought into the Insurance Company, we have an acting Managing Director (Ag MD) in Spring Life. The CBN has given us approval to do all we are doing at Spring Life; because it’s a subsidiary of the Bank. For every step we take, we seek approval both from the shareholders, CBN and NAICOM” she said.

 

To confirm the above, only recently, a former General Manager (GM) of the company (name withheld) who later acted as the man at the helms of affairs during the insurance recapitalisation era confirmed to investadvocate that Spring Life has not being doing well in recent times and as such needed a bailout.

 

 

Spring Life Assurance Limited was established and licensed to underwrite General Insurance Business since 1989 trading under the name of Apple Crown Insurance Limited and later Guardian Express Assurance Limited (GEAL).

 

 

Also as at the time of filling in report, the investor (s) that brought in the N700 million was not disclosed by the Bank.

 

However, in year 2006, NAICOM through the directive of the Federal Government, asked operators in the Insurance Industry to recapitalise.

 

Those operating in the Life Assurance category is to have N2 billion compared to N150 million; General Insurance N3 billion compared to N200 million, while Re-Insurance companies would increase its capital base from N350 million to N10 billion. And February year 2007 was given as deadline for this exercise.

 

Spring Life then Guardian Express Assurance Limited (GEAL) in order to meet NAICOM’s directive unconfirmed reports has it raised about N2.1 billion by way of Rights and decided to venture into only life business”.