How insurers get investors’ nod to raise capital
The decision to recapitalise may be taken by the company voluntarily, but sometimes a company undertakes compulsory recapitalisation in compliance with a regulatory directive. In the latter sense, recapitalisation has proven to be a useful tool in the hands of the authorities for sectoral reformation to sustain adequate economic growth and development.
To meet the compulsory recapitalisation requirements by the National Insurance Commission (NAICOM), the sector operators will have to raise additional funds or go through mergers and acquisitions.
Meanwhile, the Nigerian insurance market has been faced with different challenges in its efforts to serve the needs of the relevant stakeholders. As a result, (NAICOM), the body responsible for the regulation of the industry has over time devised different means in its aim to achieve this.
At the 39th yearly general meeting of LASACO Insurance Plc, shareholders approved plans to raise N10 billion capital through special/private placement.
The additional capital would be through the issuance of up to 9,250,000,000 ordinary shares of N0.50k each at N1.20k per share by way of special/private placement.
Also permission was granted to reconstruct its existing ordinary shares of 7,334,344 on the basis of one new share for every four shares previously held.
Other approvals granted by the shareholders were that the sum of N2,749,279,000, representing the surplus nominal value of the reconstructed shares, be transferred into the share reserve account and form part of the shareholders’ funds of the company and that the reconstructed 1,833,586,000 ordinary shares of 50k each, be revalued in accordance with the ratio of reconstruction, subject to appropriate regulatory consent and be listed on the Nigerian Stock Exchange (NSE).
The shareholders also gave a nod to payment of 5k dividends by the firm. The shareholders applauded the company for being able to pay a dividend at a time many of its contemporaries could not do so due to low profitability.
The Chairman, LASACO Insurance, Mrs. Aderinola Disu, who spoke on the development in the industry told The Guardian that the organisation grew its gross premium income by 35 per cent from N6.6 billion achieved in 2017 to N9.0 billion in 2018.
She noted that the net underwriting income also increased by 25 per cent, moving from N3.67 billion in 2017 to N4.59 in 2018, while the net claims expenses decreased by five per cent from N1.9 billion incurred in 2017 to N958 million in 2018 and the shareholders’ fund increased by two per cent, from N8.15 billion in 2017 to N8.48 billion in 2019.
She maintained that the firm will continue to concentrate on the approaches that have given its utmost dividend and remain committed to the continued delivery of excellent services to its customers.
The Managing Director/Chief Executive Officer, Segun Balogun, also expressed optimism that the firm would scale the recapitalisation hurdles.
He noted that as a composite company, the board and management have set in motion all necessary machinery to ensure the firm meets the N18 billion minimum capital requirement.
He noted that the firm would continue to work hard to surpass its last year’s financials, stressing that the future of the firm remains very bright.
The Coordinator Emeritus, Independent Shareholders Association of Nigeria (ISAN) Sir. Sunny Nwosu, commended the firm for its performance and encouraged shareholders to support the firm to scale through the recapitalisation barriers.
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