By ROSMARY ONUOHA

Management of Alliance and General Insurance Plc has denied allegations of any wrong doings leading to the suspension of its operating license by the National Insurance Commission, NAICOM, insisting that its operations are fully in line with good corporate governance and the interest of its clients and shareholders.

However, NAICOM has insisted that the company was suspended based on late or non-rendition of annual returns and audited financial statements contrary to Section 26 of the Insurance Act 2003; shortfall in minimum capital base contrary to Section 9 of the Insurance Act;  deficit in policyholders’ protection assets contrary to Section 25 of the Insurance Act; non-disclosure of significant transactions that could materially affect the true and fair view of the 2010 financial statements and; as well as  misrepresentation of audited financial statements of the company for the year ended 31st December 2010.

In a statement, Divisional Director, Corporate Planning and Strategy of A&G Mr. Dotun Onipede said that the company still wonders how the allegation of insolvency came up given that it had paid out more than N20 million for claims in the last two weeks e.g. CBN Dana Air Crash Victims Group Accident Claim and over N1.20 billion to Nigerian College of Aviation Technology, Zaria and others.

He said “The Financial Reporting Council, FRC, was not thorough enough in recommending to NAICOM to suspend the management teams of Alliance & General Insurance Limited and Alliance & General Life Assurance Plc from operation and also panelise over N100 million, because they no longer exist and the account in question had been withdrawn by the board.”

“The two companies do not exist. Following satisfactory due diligence, both of them were NAICOM approved for merger into one strong entity. NAICOM duly approved the merger under the new name Alliance & General Insurance Plc. It therefore implies that NAICOM suspended two companies that no longer exist.

Onipede said the company cannot be said to be insolvent because the merger was with intent to strengthen the entity financially, managerially and technically. “So is NAICOM saying that the company that emerged from its approval of the merger of two others is suddenly insolvent after a month?

Moreover the solvency margin of Alliance & General Insurance Company Ltd for 2010, Alliance & General Life Assurance Plc for 2009 stood at N6,317,314,326 and N8,068,614,944 respectively and  was fully approved by NAICOM. It follows then, that NAICOM’s scrutiny capability is in question. In fact, we paid more than N1.2 billion as claims within the last few months, which is not the mark of an insolvent company.”

However, NAICOM on the insolvency issue stated, “There is a difference between solvency and liquidity. A company can be technically insolvent and yet liquid. Solvency is prescribed by law and it is usually tied to a minimum amount; in this case N3 billion or 15% of net premium (whichever is greater) for non-life business.

Anything short of this amount would make the company technically insolvent. Solvency looks at the totality of the company’s liabilities to the policyholders compared with available admissible assets to meet same. So it is not just a one shot payment of claim as is the case here.”

On the merger of the two companies NAICOM replied “The merger they are relying on is a post-2010 event. The issues in contention are on the 2010 financial statements of the companies. So their defence does not add up at all. Again, as at 2010, no merger had been consummated. Even now, only approval-in-principle was granted by the Commission as no final approval has been granted.”

NAICOM further said “The fact was that the companies submitted two different sets of audited financial statements for each company for the year ended 31st December, 2010 and could not provide satisfactory explanations/justifications for this action, which clearly shows irregularities in the companies’ financial reporting format. Apart from that, the companies could not provide relevant support to validate most figures reported in these financial statements.

Non-disclosure of liabilities of N507million due to Corporate Affairs Commission in respect of its staff retirement benefits scheme and the pending legal action on the Company; non-disclosure in 2010 audited accounts, the company’s tax liabilities as well as liabilities on bank loan/overdraft facilities taken over by AMCON; clearly the companies had issues with AMCOM, FIRS, CAC, FRC to attend to.”

“Rather than deal with the issues raised in the accounts by NAICOM, the companies decided to cancel them forthwith and commissioned a new Auditor to prepare a set of fresh audited accounts for 2010. They also applied to NAICOM to withdraw the 2010 audited accounts and the restated version earlier submitted to the regulator. Does this not speak volumes of the way the companies are run,? NAICOM asked.