The Association of Securities Dealing Houses of Nigeria has urged regulators to urgently review the revocation of Universal Insurance Plc’s operating licence, warning that uncoordinated regulatory actions could weaken investor confidence in Nigeria’s capital market.
ASHON, the umbrella body for stockbroking firms registered with the Securities and Exchange Commission, said the matter extended beyond the affected insurer, raising broader concerns about coordination among sector regulators when taking actions involving listed companies.
The association’s call followed the National Insurance Commission’s revocation of Universal Insurance’s operating licence and the subsequent appointment of a receiver/provisional liquidator.
ASHON noted that Universal Insurance had disclosed to the Nigerian Exchange on August 14 that it entered into a binding investment agreement with FPNG Co-Nvest Limited for an equity injection of approximately N7.128 billion through a private placement.
Under the proposed transaction, FPNG was expected to acquire a 50.1 per cent controlling stake in the insurer upon completion.
Universal Insurance had also disclosed that its board and shareholders had approved the deal and that it was engaging with NAICOM and other relevant regulators to conclude the recapitalisation process.
However, ASHON said the cancellation of the insurer’s registration took effect on August 14, the same day Universal Insurance disclosed the proposed transaction, following a NAICOM notice dated August 13.
The association described the timing of the two developments as troubling, particularly as Universal Insurance is a publicly quoted company whose shares are traded on the Nigerian capital market.
It questioned how a listed insurer pursuing a binding capital injection that could potentially address its capital shortfall could, at the same time, be placed on a liquidation path without a coordinated process involving the relevant capital-market authorities.
According to ASHON, regulatory actions involving listed companies should take into consideration the interests of shareholders, stockbrokers, the Nigerian Exchange, and the broader investing public.
It stressed that while regulators must intervene when an institution poses risks to policyholders, investors or financial stability, enforcement actions should also seek to preserve value where a credible recapitalisation solution is available.
“Our concern is therefore not with recapitalization or prudent regulation. Our concern is with regulatory processes that may achieve the opposite of their intended objective by destroying value, unsettling investors and undermining confidence in publicly traded companies,” the association said.
ASHON argued that, where circumstances permit, regulators should assess whether proposed fresh capital is available, legitimate and sufficient to restore an institution to solvency before taking irreversible measures such as licence cancellation and liquidation.
The association also called for stronger coordination among NAICOM, the SEC and the NGX whenever the licence, solvency, capital adequacy or continued existence of a listed company is at stake.
