Shareholders approve cancellation of 11.2b shares
Shareholders Sunu Assurances Nigeria Plc have approved a major recapitalisation plan for the insurance company as it seeks to beef up its capital base ahead of regulatory deadline for new minimum capital requirements for insurance functions.
Shareholders approved cancellation of 11.2 billion ordinary shares of 50 kobo each as part of plan to create headroom for new share issuance. The share reconstruction entails cancellation of four out of five ordinary shares held by shareholders. With these, a total of 11.2 billion ordinary shares of 50 kobo each will be cancelled, reducing the company’s issued share capital to 2.80 billion ordinary shares.
The board of the company also received approval to raise N8 billion through any of the various capital raising methods. At the extraordinary general meeting in Lagos, shareholders empowered the board to raise new capital through debt or equity issuance in such terms and conditions as they may deem fit.
Besides, the company has been authorised to refinance the debt owed to Daewoo Securities (Europe) Limited with an option to convert the debt to equity at the prevailing market price. Sunu Assurances closed yesterday at the Nigerian Stock Exchange (NSE) at 20 kobo per share.
Insurance companies are in a hot race to raise new equity capital to meet new minimum capital requirements for various insurance functions as directed by the National Insurance Commission (NAICOM). NAICOM had in May 2019 released new capital requirements for insurance businesses with a 13-month compliance period for operators to shore up their minimum capital base to the required level. The minimum paid-up share capital of a life insurance company was increased from N2 billion to N8 billion, non-life insurance from N3 billion to N10 billion, composite insurance from N5 billion to N18 billion while re-insurance companies were directed to raise their capital base from N10 billion to N20 billion. The extended deadline for the recapitalisation is December 31, 2020.
Managing Director, Sunu Assurances Nigeria Plc, Mr Samuel Ogbodu, has commended the new policy on minimum capital requirements for insurance functions noting that the move was in the best interest of the insurance sector.
He said the recapitalisation would lead to consolidation of the insurance sector and provide more opportunities for large ticket transactions while positioning Nigerian insurance companies as big players, as against the current trend of being agents to foreign insurance underwriters.