Consolidated Hallmark Insurance Plc plans to raise about N1.06 billion in new equity funds from existing shareholders as the insurance company seeks to increase its minimum capital base ahead of regulatory deadline.
Regulatory filing obtained yesterday indicated that Consolidated Hallmark Insurance plans to raise new capital through a rights issue of 2.03 billion ordinary shares of 50 kobo each at 52 kobo per share.
As traditionally with rights issue, the new shares to be offered for sale will be pre-allotted to shareholders on the basis of one new ordinary share of 50 kobo each for every four ordinary shares of 50 kobo each held as at the close of business yesterday, Monday, February 03.
The board of the insurance company has already applied for regulatory approval for the rights issue, preparatory to the opening of application list for the new capital raising. The net proceeds of the N1.056 billion rights issue will be used to beef up the capital base of the insurance company.
The National Insurance Commission (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.
Managing Director, Consolidated Hallmark Insurance Plc, Mr Eddie Efekoha had outlined that raising new equity funds from existing shareholders was part of efforts to meet the new minimum capital base for the company’s non-life general insurance business.
Efekoha noted that Consolidated Hallmark Insurance has about N6.1 billion capital base at its last audited account, falling short of the new minimum capital base of N10 billion by N3.9 billion.
According to him, the company’s first line of action is to float a rights issue, which will give existing shareholders opportunity to increase their shareholdings at a lower offer price than a public offer.
He noted that the additional capital will not only help the company to meet the new minimum capital base but it will also help to accelerate the company’s growth and further secure its leadership in the industry.
He added that the company might also consider undertaking a public offer, private placement and merger and acquisitions.
“Be rest assured that the management and board are working tirelessly to meet up with the recapitalisation directive,” Efekoha said.
