Five of the listed insurance companies on the floor of Nigerian Stock Exchange (NSE) are making frantic move to raise N20 billion from new and existing shareholders, LEADERSHIP investigations have revealed.
This, it was learnt, is in a bid to recapitalise and become stronger to play active roles in insurance market by the time the new supervision model, Risk Based Supervision (RBS), kicks off in the country next year.
Already, WAPIC Insurance PLC, Sovereign Trust Insurance (STI) PLC, Consolidated Hallmark Insurance PLC, Royal Exchange PLC and Law Union and Rock Insurance PLC have concluded plans to raise a cumulative N20 billion through public offers and private placement respectively.
WAPIC Insurance PLC, on its part, plans to raise N10 billion, with STI Plc aiming to raise N2 billion, even as Consolidated Hallmark Insurance PLC plans to raise N2.5 billion additional capital or its equivalent, whether locally or internationally or a combination of both.
Royal Exchange PLC wants to raise N3 billion from the capital market, while Law Union and Rock Insurance PLC wants to raise additional capital by way of private placement to the tune of 1,031,199,000 ordinary shares of N0.50 Kobo at N0.70 Kobo per share, even as requisite regulatory approvals were obtained for the placement issue.
Commenting on this, the chairman of WAPIC Insurance, Aigboje Aig-Imoukhuede, said the company is approaching its shareholders at this time to seek approval to raise N10 billion additional capital as a proactive step towards getting the company ready and set for a much-anticipated regulatory increase in the minimum capital of insurance companies.
This, he said, is particularly instructive in view of the recent adoption of the Risk Based Supervision model by the National Insurance Commission (NAICOM) and the directive to insurance companies to implement the Solvency II Capital Allocation model by 2018.
STI PLC, on its part, said it sought the consent of its shareholders to increase the authorized share capital of the company from N5.5b to N7.5b by the creation of 4,000,000,000 (four billion) ordinary shares of 50 kobo each, ranking pari passu in all respects with the existing ordinary shares of the company.
The chairman, Consolidated Hallmark Insurance PLC, Mr. Obinna Ekezie, had informed its teeming shareholders at its recent 2016 AGM in Lagos that the firm plans to raise N2.5 billion additional capital or its equivalent, whether locally or internationally or a combination of both.
The N2.5 billion, he said, would be raised through either private or special public offerings right issue or a combination or any other methods it deems fit.
In the same vein, the chairman, Law Union and Rock Insurance Plc, Mr. Remi Babalola, said, “Consequent upon a conditional approval issued by the National Insurance Commission (NAICOM) that the investor’s post-placement position should not exceed 20 per cent of the company’s equity, the placement was 83.3 per cent subscribed, thus bringing the total shares subscribed to 859,000,000 ordinary shares”.
The additional capital raised, he stressed, is expected to significantly enhance the company’s operations and boost its capacity to play in the oil & gas and engineering subsector of the insurance space.
Moreover, LEADERSHIP findings revealed that more than 10 insurers are equally planning to raise funds through the nation’s capital market, even as about five underwriting firms are currently discussing with foreign investors to come and invest in these firms.
The likes of Niger Insurance Plc, Universal Insurance PLC, International Energy Insurance (IEI), among others, are already discussing with various foreign investors who have indicated interest to invest in Nigeria’s insurance industry.
In the same vein, Standard Alliance Insurance PLC has restructured its holding structure as part of plans to further raise additional capital to be competitive when RBS finally takes off.
The Group Managing Director of Standard Alliance, Mr. Bode Akinboye, said the share construction was the third point of his four-point transformation project anchored on people, processes and product.
“We shall move to the last of the four-point agenda, which is to raise fresh capital to enable Standard Alliance become a bigger player in the insurance market”, he added.
Akinboye explained that fresh capital might be raised through loan issuance, debt issuance, equity issuance, convertible shares issuance or preference shares issuance, both from local and international investors.
While some had already notified NSE and the Security and Exchange Commission (SEC) of their plans to approach the market through public offers, others are already discussing at the board level on ways to woo new and existing shareholders to acquire more holdings in their respective insurance firms.
With RBS expected to lead the sector to recapitalisation and specialisation of businesses, most companies planning to operate in the big and lucrative sectors, such as oil and gas, aviation, maritime sectors, among others, are trying to raise funds to increase their capitalisation.
Some companies, it was learnt, are planning to seek the approval of their shareholders to raise funds at their respective 2016 Annual General Meetings (AGM) expected to come up in a couple of weeks.
In a bid to ensure that stronger insurance firms emerge in the country, the National Insurance Commission (NAICOM) is coming up with a Risk Based Supervision (RBS) framework that will mandate insurance operators to operate within their capital limit.
To this end, the regulator is set to commence capital verification exercise in insurance industry in the next couple of weeks in readiness for RBS expected to lead the insurance sector to recapitalisation next year.