Sunu Assurances Nigeria Plc at the weekend submitted application seeking regulatory approval to proceed with its planned share capital reconstruction, which will see cancellation of 11.2 billion ordinary shares of 50 kobo each, 80 per cent of the company’s issued share capital.
Sunu Assurances plans to cancel 11.2 billion ordinary shares of 50 kobo each out of its issued 14 billion ordinary shares of 50 kobo each as part of a recapitalisation plan aimed at increasing the capital base of the insurance company to the new minimum capital base.
Shareholders of Sunu Assurances Nigeria had at an extra-ordinary general meeting in March 2020 approved the share capital reconstruction.
Regulatory filing at the weekend showed that the share capital reconstruction will result in the cancellation of four existing ordinary shares out of every five ordinary shares held by shareholders as at the close of business last Friday.
With this, the total number of issued ordinary shares post capital reconstruction exercise will be 2.80 billion ordinary shares of 50 each while a total of 11.2 billion ordinary shares of 50 each will become cancelled and unissued.
The Nigerian Stock Exchange (NSE) stated that it will place trading in Sunu Assurances’ shares on suspension effective today.
The company had stated that the purpose of the share capital reduction was “to allow for the issuance of new ordinary shares by way of a rights issue and private placement, in order for the company to comply with the recently revised share capital requirement by the National Insurance Commission (NAICOM) for insurance companies”.
The company explained that the share capital reconstruction was adopted as the more efficient approach to creating room for new equity capital issuances.
“The share capital reconstruction will lead to the cancellation of 11.2 billion ordinary shares and result in an increase in the share price to N1. This will enable the rights issue, private placement and any subsequent equity capital raising to be priced above the nominal value of 50 kobo,” the company stated.
According to the company, the shortfall between its paid up capital and NAICOM’s new capital requirement of N10 billion for non-life insurance companies was N7.71 billion as at September 30, 2019.
The company stated that it is exploring a recapitalisation plan to augment the shortfall ahead of the December 30, 2020 deadline for compliance with the new minimum capital base.
NAICOM had, in May lasat 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.
SUNU Assurance Group had in 2016 acquired 60 per cent equity of the former Equity Assurance Plc and renamed the company SUNU Assurances Nigeria Plc. SUNU Assurance has operations in not less than 12 Franco-phone African countries and the acquisition of Equity Assurance was a major entry strategy into the Anglo-phone countries.