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Underwriters set new strategy for recapitalisation with earnings

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Recapitalisation is a form of a corporate reorganisation, which involves making substantial changes to a company’s capital structure. But earnings by the industry operators could serve as elixir ahead of the deadline.

Recapitalisation is one of the strategies companies use to improve their financial stability. Currently, the nation’s insurance industry is undergoing the process.

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 overtime, devised different means in its aim to achieve this.

With the approval obtained by the board and management of Universal Insurance Plc from the shareholders at its 49th yearly general meeting in Lagos, the company is set to deploy strategies that would see it raise the N10 billion recapitalisation requirement for the general business category.

The board had sought and ob­tained the shareholders’ approval to raise the company’s capital through Right Issues, Share Re­construction, additional equity capital for the company up to the maximum limit of the authorised share capital.

This would be by way of special placement or public offering, with or without a preferential allotment/or rights issue or a combination of any of them, either locally or internationally and upon such terms and conditions as the directors may deem fit in the inter­est of the company and subject to the approval of the regulatory au­thorities.

“That in the event of over sub­scription of the offer/issue to capitalise the excess money and allot additional shares to the extent that can be accommodated by the company’s unissued share capital subject to the approval of the regulatory author­ities and that the proceeds should be used for the same purpose as the offer/issue,” the shareholders resolved.

The Acting Chairman of Universal Insurance Plc, Anthony Okocha, said there are over 30 billion registered shares, out of which 16 billion have been issued, while 14 billion is still warehoused and could be brought up for issuance if need be.

He disclosed that the company has in its kitty, N6.5 billion and would need N3.5 billion to make up for recapitalisation requirement as a general business insurer.

On steps to beat the June 30, 2020, deadline, Okocha stated: “More dis­cussion is ongoing but could not be discussed prematurely. We are also looking at Right Issues, the compa­ny is in discussion with core inves­tors and probable foreign influence into your company.

“Notwithstanding the shape and color of the global economy in 2018 and its effect on the macroeconomic landscape in Nigeria, the company recorded about 45 per cent increase in gross written premium (GWP) from N753 million in 2017 to N1. 689 billion in 2018.

Claims expense decreased from N463 million in 2017 to N263 million in 2018. However our underwriting expense rose from N166 million in 2017 to N452 million in 2018.”

Okocha said it is the intention of the board and management to intensify the corporate strategy in order “to identify the needs of po­tential customers, their behavior and culture and have an attentive ear to market-feedback so to create products that will address them.

He disclosed that the company would continually invest in information technology to create an insurance driven by technology that will not only deliver services realtime and in seamless manner but will also deliver on the numbers, adding that the Universal brand has stood the test of time and the values created over the years are embedded in the loyalty and commitment the firm has enjoyed from all stakeholders.

“We intend to keep this Universal Insurance Plc. as a legacy for sever­al generations to come. We are sin­cerely grateful to our treasured cus­tomers, brokers, agents and other stakeholders who have objectively trusted in the universal advantage over the years”, he said.

The Managing Director and Chief Executive of the company, Ben Ujoatuonu, urged the shareholders to approve that they, the board and management, go out there and raise the required funds so as to retain the company’s brand.


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