The Shareholders of AIICO insurance Plc have approved a request by the management to increase its authorized share capital from N18 billion to N20 billion, through the creation of additional 4 billion ordinary shares of 50 kobo each.
This is according to a press release issued by the Head, Strategic Marketing and Communications of the firm, Segun Olalandun, and seen by Nairametrics.
The approval by the shareholders was obtained during the recently concluded 50th Annual General Meeting of the firm, held yesterday, December 8, 2020.
- In the same vein, the shareholders also approved the declaration of 1 bonus share for every eight (8) ordinary shares held by existing shareholders of the Company as at December 28, 2020, payable from retained earnings .
- Also, 1 bonus share for every five (5) ordinary shares held by existing shareholders of the Company as at December 28, 2020 payable from share premium.
What they are saying
Commenting on the recent development during the meeting, the Managing Director and Chief Executive Officer, Mr. Babatunde Fajemirokun, shed some light on the satisfactory progress the Company has made in its recapitalization journey, having surpassed the December 2020 expectations of the Regulator.
- “There are no doubts that we have made some giant strides along this path. Beyond just meeting the requirements, we have seen the potentials and value this exercise brings and have positioned ourselves to take full advantage for value creation, both in the short and long term. AIICO will emerge stronger and with greater capacity to underwrite more risks.”
Why it matters
Despite surpassing the December 2020 deadline recapitalization target (phase I), this recent action will help strengthen the financial potentials of the firm and help to strategically position it to maximize future opportunities, creating enough stock buffers in the company’s treasury with a potential likelihood of increased paid-up capital in the future.
What you should know
- NAICOM had earlier issued a circular on December 30, 2019, referenced NAICOM/DPR/CIR/25-03/2019, which extended the deadline for the recapitalization of insurance firms to December 31, 2020.
- Due to the impact of the COVID-19 pandemic and its effect on business and households, NAICOM on June 3, 2020, via a circular referenced NAICOM/DPR/CIR/25-Q4/2020, further extended and segmented the recapitalization process into two phases and deadline of December 31, 2020 (50% of the minimum paid up for insurance and 60% for reinsurance) and a final deadline of September 31, 2020.
- AIICO Insurance is a leading composite insurer in Nigeria founded in 1963 with a special business focus on Life and health insurance, General insurance, and Investment management services.
- According to Investopedia, Authorized share capital also known as Authorized stock is the maximum number of stock units (shares) that a company is legally allowed to issue or offer based on its corporate charter. An increase to the Authorized share capital is only possible through shareholder’s approval. In addition, companies often hold back a portion of their authorized share capital for future financing needs.