Linkage Assurance Plc., has indicated that the company is looking to beef up its capital base in a move that will see them comply with the new minimum capital base requirement set by NAICOM.
In a statement by the company, it announced that it would have an extraordinary general meeting next month, during which shareholders are expected to consider and approve resolutions authorizing the increase in share capital and the new capital raising.
Shareholders are expected to increase the authorized share capital of the insurance company from N7.5 billion or 15 billion ordinary shares of 50 kobo each to N15 billion of 30 billion ordinary shares of 50 kobo each through the creation of 15 billion new ordinary shares of 50 kobo each.
With the increase in authorised share capital, the company will also be amending its memorandum of association and articles of association to reflect the new authorised share capital of N15 billion divided into 30 billion ordinary shares of 50 kobo each.
Shareholders are expected to mandate the directors to “raise additional equity capital for the company up to the maximum limit of the authorised share capital, whether by way of special placement or public offer, right issue or other methods 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”.
The National Insurance Commission (NAICOM) had in May, this year 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. Insurance companies are required to comply fully with the new minimum capital base by June 30, 2020.
Many insurance companies have already launched plans to raise new equity funds. Lasaco plans to raise about N11.1 billion in new equity funds through the issuance of 9.25 billion ordinary shares of 50 kobo each at N1.20 per share. The company will issue the shares through special or private placement, which implies that the shares may be offered to strategic investors.
Consolidated Hallmark Insurance Plc is also concluding arrangements to raise new equity funds from existing shareholders as part of efforts to meet the new minimum capital base for its non-life general insurance business.