American International Insurance Plc (AIICO) on Friday said that it was not resting in its drive to achieve the reviewed capital base for insurance set by National Insurance Commission (NAICOM) to earn customer’s confidence.
Mr Babatunde Fajemirokun, Managing Director and Chief Executive Officer of AIICO Insurance, said this at a virtual Fact Behind the Offer (FBO) by the Nigerian Stock Exchange (NSE) in Lagos.
It was reported that FBO is a platform created by NSE to provide players of the capital market and investing public with market information about companies listed on the Exchange.
Fajemirokun said that the firm’s current capital base was N11.6 billion and it hoped to increase this to N15.02 billion after the rights issue and bonus issue by the end of the year.
This, he said, would bring them closer to the NAICOM new capital requirement of N18 billion by 2021.
“Rationale for the rights issue is, NAICOM, last year, increased the regulatory capital requirements for insurance industry to N18 billion, from N9 billion.
“AIICO has not rested, we have been focused on three strategies, first is private placement, successfully executed in January which raised N5.3 billion and increased our capital base from N6.3 billion to N11.6 billion.
“Of course, we had a shortfall from this, which will be raised through the rights issue and bonus issue. We applied the private placement to the loan or convertible loan repayment to the IFC, which we are currently executing.
“Also, we have investment in technology, human capital, plant and equipment and we also launched the facts behind the offer and rights issue to raise N3.48 billion, which started on Sept. 2.
“It will increase our capital base from N11.6 billion to N15.1billion, which will be deployed to two ways, technology and PPE.
“The board recommended the bonus issue which will involve capitalising some of our retain earnings with the proposed term of one share for every five shares to shareholders as at third December 2020,” Fajemirokun said.
According to him, the new capital requirement of N18 billion is due in 2021, and after the bonus issue, AIICO will be at N16.02 billion.
“The key impact will ensure that we are able to underwrite big transactions, especially in aviation and oil and gas, earn market confidence and bring us closer to meet the new requirement.
“So, at the end of this rights issue, AIICO would have met the current capital requirement which is 50 per cent (N9 billion)
“Why stakeholders should invest in the rights issue is because AIICO’s current capitalisation as at Sept. 7 was about N10.2 billion, because we have got a diversified business with a life and non-life business with complimentary business in health, pensions, asset management and others.
“We have 9 to 10 per cent market share based on gross premiums as at 2018. We have shown solid growth in our compounded annual growth rate for our total asset, total equity, PAT as well as dividend per share,” he said.
Mr Oscar Onyema, Chief Executive Officer, NSE said that the rights issue presented shareholders an opportunity to support AIICO insurance with a balance sheet, increased efficiency and repositioning to increase market share.
He said that the ultimate aim of the rights issue was to improve shareholders’ returns.
Onyema, who was represented by Mr Olumide Bolumole, said that NSE would continue to position itself as the African exchange of choice.
He said it would continue to assist listed companies to achieve their business objectives.
Mr Dipo Williams, representing the Chartered Institute of Stockbrokers, said that AIICO had been one of the stock market’s good companies that had been listed since 1990.
Williams said that AIICO insurance had seen the benefits of the market and this was why it was back for more rights issue.
He assured the firm that the stockbroking community would always support them.
At the end of the webinar, Mr Oladeji Oluwatola, Chief Operating Officer of AIICO rang the closing gong to close the market.