Universal Insurance’s N7.1bn rescue deal collides with licence revocation

Universal Insurance Plc’s N7.128bn recapitalisation has been thrown into uncertainty after the National Insurance Commission revoked the insurer’s operating licence and appointed a receiver/provisional liquidator over its failure to meet the regulatory minimum capital requirement.

The development creates a sharp contradiction in the insurer’s recapitalisation process. On 14 August, Universal Insurance disclosed to the Nigerian Exchange Limited that it had secured a N7.128bn equity investment from FPNG Co-Nvest Limited through a private placement, a transaction that would give FPNG a 50.1 per cent controlling stake in the company.

However, NAICOM’s action, which took effect on 19 August, followed the insurer’s failure to meet the prescribed Minimum Capital Requirement within the stipulated compliance period.

In its market disclosure, Universal Insurance said the investment was designed to strengthen its capital base, enable it to exceed the applicable regulatory threshold and maintain a strong solvency margin.

The company said its board and management were engaging NAICOM and other regulators to obtain the necessary approvals for the transaction. It also disclosed that the required board and shareholder approvals had already been secured.

The planned investment was to be completed through a private placement under a binding investment agreement between Universal Insurance and FPNG Co-Nvest.

However, NAICOM’s subsequent regulatory action has now placed the future of the transaction and the insurer itself under a receiver-led process.

In a notice addressed to the Chairman of Universal Insurance’s board, NAICOM said it revoked the company’s licence pursuant to powers granted under the Nigerian Insurance Industry Reform Act 2025.

The commission appointed Ogbonna Chukwumerije, a Partner at Pinheiro LP, as receiver/provisional liquidator to commence the process of winding up the company’s affairs.

Under the terms of his appointment, Chukwumerije is required to trace, recover, secure and take possession of Universal Insurance’s assets, while also collating and settling its liabilities in accordance with NIIRA 2025.

He is further expected to liaise with NAICOM, obtain and review relevant information and submit periodic reports on the progress of the liquidation process.

In a separate public notice dated 18 August, Chukwumerije formally notified banks, financial institutions, policyholders, creditors, debtors, customers and other stakeholders of the insurer’s receivership.

He said the appointment followed NAICOM’s cancellation of Universal Insurance’s licence over its failure to meet the applicable minimum capital requirement.

The receiver also stated that he had powers under NIIRA 2025 and the terms of his appointment to assume management and control of the company and take steps necessary to preserve, protect and realise its assets.

He directed individuals and institutions dealing with Universal Insurance’s funds, assets, records, policies, claims, liabilities or other affairs to verify the authority of anyone claiming to act on behalf of the company.

The regulatory action comes amid a wider industry-wide recapitalisation exercise in which Nigerian insurers are under pressure to strengthen their capital positions.

The insurer’s stock suffered on Wednesday owing to the news of the revocation. Its stock was down by 9.4 per cent to 0.77k in early trading. It had reached a 52-week high of N1.74.