By Udeme Ekwere   Monday, 13 Sep 2010

 

Shareholders of Regency Alliance Insurance Plc have approved plans by the company to raise additional capital to improve its operations.

The shareholders gave the approval at the company‘s Annual General Meeting in Lagos on Thursday, saying, ”The company be and is hereby authorised to raise additional capital via the issue of debt or equity (including the right to subscribe) or a combination of both.”

The Chairman of the company, Admiral Augustus Aikhomu (retd), in his address, disclosed that the company had intended to access the market with a hybrid offer of 5.2 billion shares of 50 kobo, last year.

However, he said that the move was suspended in view of the prevailing economic realities which tended to make such offer unattractive.

He said, ”However, we intend to seek alternative ways of recapitalising the company in order to take advantage of the Local Content Act, recently enacted to increase the participation of local companies in the oil and gas sector. Furthermore, it will enable us increase our reserve base and underwriting capacity.”

Aikhomu disclosed that the additional funds will be needed to strengthen the company‘s existing branch network and consolidate its investments in local and foreign subsidiaries.

He noted that the harsh economic climate made businesses in Nigeria, especially those in the insurance industry to witness low performance.

According to him, ”Our company was able to forge ahead despite the harsh operating environment. This was due to the effect of the economic meltdown as well as the socio-economic instability in the Niger-Delta area, which weakened the performance of our branches in that area.

”The combined effect of these provisions is that our gross profit provision was reduced by N275m, which was adjusted from its underwriting profit.”

In its result for the year ended December 31, 2009, the company‘s gross premium closed at N1.50bn representing a 13.5 per cent decline as against N1.74bn in the similar period of 2008. Its underwriting profit stood at N618m compared to N810m in 2008.

 

Source: The Punch