Joy Agwunobi
African Alliance Insurance Plc has filed a suit with the Federal High Court in Lagos, seeking to overturn the National Insurance Commission’s (NAICOM) recent dissolution of its board.
In suit number FHC/L/CS/2008/2024, African Alliance is requesting a judicial declaration that NAICOM’s October 29, 2024, decision to dissolve its board and dismiss the Chief Executive Officer and executive directors was unlawful, invalid, and void.
The lawsuit names as defendants the interim board appointed by NAICOM, comprising Haruna Mustafa, Jacob Erhabor, Wasiu Amao, Oremeyi Longe, Anthony Achebe, and Halimatu Khabee. Other defendants include Talmiz Usman, NAICOM’s Director of Legal, Enforcement & Market Development, and the Minister of Finance.
African Alliance is asking the court to determine whether NAICOM’s actions adhered to the National Insurance Corporation Act, the Insurance Act, and the 2015 Prudential Guidelines for Insurers and Reinsurers in Nigeria.
The plaintiff, through its counsel Tayo Oyetibo, the company further contends that NAICOM acted unreasonably and in bad faith. African Alliance specifically requests the court’s assessment of whether NAICOM’s decision to seek Finance Ministry approval to take over its management—while an application to sell its stake in Pension Alliance Limited (PAL) was pending—was legally justified and conducted in good faith.
The insurer is urging the court to nullify NAICOM’s directive from October 29, 2024, appointing the interim management board and signed by Talmiz Usman, deeming it unlawful. It also seeks an injunction to prevent the defendants, particularly the interim board members, from conducting any transactions or asset sales on behalf of African Alliance.
In an affidavit accompanying the summons, African Alliance alleges that NAICOM obstructed its fundraising efforts, which it claims demonstrates bad faith on the Commission’s part.
The affidavit reveals that African Alliance owns a 49 per cent share in Pensions Alliance Limited (PAL), a joint venture with FSDH Holding. According to the African Alliance, NAICOM’s actions hindered PAL from holding its Annual General Meeting (AGM), preventing the declaration of dividends that could have supported African Alliance’s operational funds.
African Alliance further noted that it had presented a comprehensive Business Turnaround Plan (BTP) to NAICOM, detailing short-term, medium-term, and long-term strategies for addressing the Commission’s concerns.
The insurer highlights that a core component of this plan involved bridge financing through the sale of its 49 per cent stake in PAL. Following this submission, however, NAICOM directed African Alliance to inject N6 billion into the company within 90 days from July 1, 2024.
According to the Company, NAICOM still published a notice that it had put Africa Alliance under its Regulatory Order.
The company added: “The action of the Commission was done in bad faith to frustrate the plaintiff’s efforts in raising funds for the bridge financing.
“As a result, a run on the company greatly depleted the plaintiff’s operational funds and rendered all the plaintiff’s efforts at getting investors futile, leaving the plaintiff with the only option of selling its assets to raise the N6 billion bridge financing.
“This action of the Commission had serious ripple effects on the financials of the plaintiff, resulting in loss of customers and investors, serious financial loss and plunging the plaintiff into a serious financial and investment crisis.
“To raise the N6 billion bridge financing, the plaintiff had to put up its shares in PAL for sale and got offers from Sea Global Energy Company Nigeria Limited and Ovie-B Investment Limited.
“By a letter dated October 22, 2024, the Commission refused its consent to the sale of the assets to the prospective investor not because the timeline it gave the plaintiff had expired but because it was not satisfied with the information about the prospective purchaser and further asked for onerous conditions which include but not limited to getting consent from PENCOM when the applicable Guidelines did not provide for PENCOM’s approval as a condition precedent to the grant of the Commission’s consent.
“Upon receipt of the Commission’s letter, the plaintiff contacted Sea Global Energy Company Nigeria Limited to see if they are willing, able, and ready to fulfil their offer of N30 billion for the assets and N5.85 billion to buy out the majority shareholders of the plaintiff, and they confirmed their readiness to fulfil their offer.
“By a letter dated 30 October 2024, the plaintiff wrote to the Commission to inform her of the Sea Global Energy Company Nigeria Limited and its readiness to purchase the assets.
“Surprisingly, shortly after the delivery of the plaintiff’s letter to the Commission, the plaintiff received a letter from the Commission notifying it of the exercise of the powers under sections 41, 42, and 50 of the National Insurance Commission Act on the same 30th October 2024 to dissolve the management and Board of the Plaintiff and remove all members of the Board, including the Chief Executive Officer and Executive Directors; appoint an interim Management/Board to steer the affairs of the Company.
“After the receipt of the letter of the Commission, the plaintiff discovered that while the Commission was engaging with the plaintiff on the sale of the company’s assets, the Commission was, at the same time, seeking the approval of the Minister of Finance to take over the management of the plaintiff.
“The plaintiff also discovered that the plan of the Commission and its officers from the outset was to take over the plaintiff’s management through an interim management board and sell the company’s assets to their nominees grossly undervalued.
“The act of the Commission in seeking the approval of the Minister of Finance to take over the management of the plaintiff while still engaging the company on the sale of its assets to raise funds to meet its obligation is unreasonable and in bad faith”, the application stated.
