9 Insurance Companies Face Legal Battle Over N3b Legacy Funds

Nigeria’s Pension Transitional and Arrangement Directorate (PTAD) is weighing up the possibility of taking legal action against some nine insurance companies still owing the Directorate about N3billion legacy funds, as was revealed by investigations. PTAD had earlier set a December 2017 deadline for defaulting insurers to pay their respective legacy Fund to the agency, which these firms failed to adhere to. The affected underwriting firms, are too illiquid to pay their respective legacy funds to the agency, especially, at a time the insurance industry is bracing up for another round of recapitalisation. Investigations show that the likes of GoldliAttonk Insurance, Standard Alliance Life Assurance, Industrial and General Insurance (IGI PLC) and Nigerian Life and Provident Company, among others, failed to meet the December 2017 deadline given to them by PTAD to remit funds in their possession. When the agency resumes its business in 2018, an insider source revealed that the issue would be revisited and the concerned insurers re-contacted. Already, information has it that PTAD has notified the Attorney-General of the Federation of Nigeria (AGF), while also working with the Nigerian Economic and Financial Crimes Commission (EFCC) as well as the Independent Corrupt Practices Commission (ICPC) to recover these funds in a bid to pay pension arrears owed under the old pension scheme. Speaking on this development earlier in 2017, Executive Secretary, PTAD, Sharon Ikeazor, said that the directorate may take legal action against companies which fail to meet the December deadline. According to her, “About N25billion is still being owed by some Insurance Companies. PTAD had given the insurance companies one year in which to repay the monies owed, taking into consideration the fact that the monies have been in their possession since 2015 and they knew they ought to hand over to PTAD since then.” While some of the affected companies complied, others, she pointed out, said they will not be able to meet the deadline of December 2017. “Among companies that have complied are; Leadway Assurance with full payment of N33.3 million, with AIICO Insurance complying in the form of transferring properties and investments worth N1.5 billion to the directorate, while NICON Insurance substantially complied, transferring fixed assets worth N13Billion to PTAD. The value placed on them are yet to be verified and reconciled. The Federal Ministry of Works and Housing is carrying out the valuation of those assets to determine their actual value,” she said. She noted that PTAD has entered the enforcement stage in the recovery process against defaulting insurance companies, as the final Demand Notice was served in October, 2017. PTAD, she pointed out, is liaising with the National Insurance Commission (NAICOM) for regulatory support. It had earlier been observed that the inability of nine insurance companies to pay about N3 billion legacy pension funds at their possession is scuttling efforts by the federal government to offset its huge pension liabilities under the old pension scheme. As a consequence of this, retirees under the Defined Benefits Scheme (DBS) may find it difficult receiving their pension entitlements as and when due. Legacy Funds are pension funds of federal government parastatals kept in the custody of insurance firms before the enactment of the Pension Reforms Act (PRA) in 2004. There are 15 insurance companies owing about N23.5 billion legacy funds and were directed by the federal government to remit this funds to Pension Transitional Arrangement Directorate (PTAD), but six of them seems to have transferred most of the funds in their possession, while the remaining insurers are yet to remit theirs to the agency. While NICON, Leadway Assurance, AIICO, Custodian Life Assurance Limited, LASACO Assurance Plc and African Alliance Insurance Plc have paid a cumulative N20.5 billion legacy fund they owe, the likes of Goldlink Insurance, Standard Alliance Life Assurance, Industrial and General Insurance (IGI PLC) and Nigerian Life and Provident Company, among others, are still foot-dragging to pay a cumulative N3 billion they are owing, investigation reveal. NICON, it was learnt, has handed over certificates of occupancy of its 28 properties located all over the country tentatively valued at N13 billion in lieu of cash payments under legacy funds to PTAD, with AIICO remitting N1.5 billion legacy fund to the agency, even as LASACO Assurance equally paid about N1.5 billion to the Directorate. Leadway Assurance has paid N330.2 million while Custodian and Allied Insurance paid N148 million. Confirming this, Ms. Ikeazor said refusal of the remaining companies to pay what they owe, is affecting the ability of the federal government to offset its pension liabilities. According to her, “The slow response of some of these insurance companies has unnecessarily delayed the settlement of the huge pension liabilities inherited by PTAD,” she said. Findings also revealed that some of the properties of insurance companies taken over by PTAD are yet to get buyers, especially, as the agency is yet to value these assets to confirm the true value. This is making it difficult for this agency to accrue money from the sale of this assets to offset the pension liabilities federal government is owing under the old scheme. The Pension Reform Act, 2014 vested all Defined Benefit Scheme (DBS) pension assets, funds and liabilities in PTAD and following the consolidation of treasury funded parastatals’ pension by PTAD in August, 2015, the Nigerian Federal Government discontinued the release of pension intervention funds to insurance companies. To this end, PTAD took over the administration of legacy pension funds and assets in the custody of insurance companies and boards of trustees of treasury funded parastatals and the directorate directed the concerned insurance companies to transfer the funds and assets in their custody.

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