Alex Enumah in Abuja
Justice C. J. Aneke of the Lagos Division of the Federal High Court has restrained the National Insurance Commission (NAICOM) from taking any further steps in implementing its deadline date for insurance and reinsurance companies to recapitalise.
Justice Aneke made the order on December 21 while delivering ruling in an ex-parte application brought before the court by the Incorporated Trustees of the Pragmatic Shareholders’ Association of Nigeria.
The motion, marked FHC/L/CS/1797/2020 and filed on December 15, 2020, was moved on behalf of the group by their lawyer, I.C. Ifedora.
The applicant prayed the court for an order of interim injunction restraining the defendant and its agents from taking further steps in the recapitalisation process in the insurance industry pending the hearing and determination of its motion on notice before the court.
NAICOM, in a circular in May 2019, had called for increase in the minimum paid-up capital for insurance and reinsurance companies.
According to the circular, life insurance firms are required to meet a minimum paid-up capital of N8 billion, from the previous N2 billion, while general insurance companies are required to raise their minimum paid-up capital to N10 billion from N3 billion.
NAICOM also raised the regulatory capital for composite insurance from N5 billion to N18 billion, while it increased the minimum capital of reinsurance businesses from N10 billion to N20 billion.
The firms are, however, directed to comply with the new directive not later than December 31, 2020 and September 30, 2021 respectively.
But the plaintiff had approached the court to seek redress.
They asked the court to also restrain NAICOM from taking further steps or issuing further directives or circulars in a bid to enforce the December 31, 2020 and September 30, 2021 deadlines, or imposing any restrictions on the business of any insurance or reinsurance company for the purpose of enforcing NAICOM’s circular or directives on the recapitalisation, pending the hearing and determination of motion for interlocutory injunction filed in the suit.
But in the court documents obtained by THISDAY at the weekend, Justice Aneke, while delivering ruling in the ex-parte, after reading the affidavit in support of the motion sworn to by Bisi Bakare and after hearing I. C. Ifedora counsel to the applicant, made “an order for maintenance of the status quo ante belum as of December 21, pending the hearing and determination of the motion on notice already filed.”
The Pragmatic Shareholders Association had filed an origination summons asking the court to determine that in view of the global pandemic, the economic recession and the destruction of public and private property during the #EndSARS protests and the impact these factors have on the businesses of insurance companies, the refusal of NAICOM to rescind the recapitalisation deadlines is an abuse of power and an unreasonable exercise of regulatory powers pursuant to the Insurance Act and the NAICOM Act.
They are seeking an order setting aside the circular that imposed the deadlines.
The association prayed the court to determine that the carrying out of the deadlines will amount to a divestment by NAICOM of their property rights in their investments.
The case has been adjourned till January 12, 2021 for hearing.