By Rosemary Onuoha
For the second year running, some insurance companies have allowed their shares to be technically suspended by the Nigerian Stock Exchange (NSE) for late submission of their financial results.
A total of 12 insurance companies’ shares have been technically suspended by the stock exchange, however, after getting the hammer from the NSE last year for failure to submit their results in good time, seven of these companies still allowed the hammer to descend on them this year.
The seven companies are Great Nigeria Insurance; Guinea Insurance; Investment & Allied Insurance; Crusader Insurance Group; International Energy Insurance; Standard Alliance as well as Staco Insurance.
Meanwhile, the new five entrants into the list are Equity Assurance; African Alliance; Lasaco Assurance, Linkage Assurance as well as Oasis Insurance.
The companies that learnt their lesson after the hammer of last year were IntercontinentalWapic; Niger Insurance; Unic Insurance; Universal Insurance as well as Royal Exchange Group.
The 12 companies which are quoted on NSE were placed on Technical Suspension meaning that there will be trading, but no movement on their share prices which takes effect from July 1, 2011.
The NSE noted that the affected companies have not submitted their financial statements for the year ended December 31, 2010 which is in violation of the post-listing rules of the exchange as contained in Key Issue No. 5 (Annual Accounts Procedures), which states that “Audited annual accounts of companies ought to be submitted within three months of year end.”
The NSE states that the investing public needs timely financial information from listed companies in other to facilitate stock transactions that are based on market fundamentals.
This is essential for fair price discovery and investor confidence in our capital markets. “Pursuant to Article 90 of The Exchange’s rules, which states that the Exchange may at its discretion at any time suspend or lift suspension in trading in particular securities, these companies’ stocks will be on technical suspension for the next one month; after which the Exchange reserves the right to take further action,” the NSE noted.
It will be recalled that issues of doctored returns, late submission as well as unauthentic and inaccurate accounts have plagued the insurance industry for too long which forced the National Insurance Commission (NAICOM) to delay approval of most results last year.
Section 26(1) of the Insurance Act requires an insurance company to submit its audited accounts and annual returns to the commission not later than 30th June of each year. Quarterly returns are also to be filled not later than 30 days after the end of the quarter.
Mr. Fola Daniel, commissioner for Insurance had reiterated that NAICOM can’t be involved in criminal conspiracy because it will not rubber stamp audited accounts as was the case for a long time.
Although operators are arguing that NAICOM is over regulating the sector, Daniel posited that without over regulation, discipline will not be there because integrity in the insurance industry still goes with a lot of question mark.
Citing some cases of indiscipline in the industry, NAICOM lamented that it queried a particular company seven times on the state of her accounts while there were companies that NAICOM had to send inspectors twice.
“A company sent her account one day before the advertised day of AGM while another submitted her account without any director signing the documents. That kind of rascality can not be condoned anymore,” Daniel stressed.
Meanwhile, Mr. Yemi Soladoye, an industry consultant said that Naicom should go as far as suspending companies from operating in the market just like the NSE does when companies fail to submit their results on time.
In his words “Sanctioning a company should not be about paying fine. It should be about making the industry players know that you have the power to withdraw their license as the regulator. It should not be about ‘we fine you,’ but by telling you that you are probably not fit to run this business.”