By Rosemary Onuoha

Having been inactive for over ten months, SpringLife Assurance Ltd could be headed for liquidation following the withdrawal of the operating licence of its parent bank, Spring Bank Plc, and subsequent transfer of the bank’s assets to Enterprise Bank

Insurance PHB which is a subsidiary of former Bank PHB however says the licence withdrawal of its parent company, Bank PHB, will not affect its operations.

But stakeholders are worried that the insurance companies may be in for tough times since a significant portion of their shareholders funds are held by the liquidated banks.

The Central Bank of Nigeria (CBN) had penultimate Friday withdrawn the licences of Spring Bank Plc, Afribank Plc and Bank PHB Plc, alleging that they lacked the necessary capacity and ability to beat the recapitalisation deadline.

The banks were immediately taken over by the NDIC through the ‘bridge bank mechanism’ which renamed them as Mainstreet Bank (former Afribank) Keystone Bank (Bank PHB) and Enterprise Bank (Spring Bank). AMCON later took over the management of the banks.

Two of the former banks, Bank PHB and Spring Bank both have insurance subsidiaries where they control majority stakes.

Vanguard investigations revealed that the chances of SpringLife surviving the tsunami is dicey because its operating licence was withdrawn since last October by NAICOM after the regulatory body noticed a shortfall in its shareholders funds.

The company was not able to attract investors when its parent bank was alive, hence the chances of it being bought over by investors in line with the divestment directive by the Central Bank of Nigeria (CBN) is slim.

At some point some investors from South Africa (SA) showed interest in SpringLife but nothing tangible came out of it as the investors fail to show up.

Insurance PHB told Vanguard that it operates a separate account from its former parent bank which is regulated by NAICOM and business has continued unabated despite the hammer of CBN on its parent Bank.

NAICOM acting in accordance with section 9 of the Insurance Act 2003, suspended the operational license of Spring Life with effect from October 19, 2010.

This became necessary following the inability of the company to maintain the statutory minimum capital of N2 billion required for underwriting Life Insurance business in the country.

NAICOM claimed that the action was aimed at ensuring that the company’s existing capacity for claims settlement and other obligations is not overloaded, consequently the company was not allowed by the commission to accept any new business until the observed shortfall in the company’s capital base is remedied through injection of fresh capital.