Wapic Insurance Plc has launched a new capital raising programme aimed at raising about N5.93 billion from the shareholders of the insurance company.
The new share issuance is expected to beef up the capital base of the company as insurers move to comply with industry new minimum capital requirement.
Wapic Insurance indicated that it plans to issue 15.61 billion ordinary shares of 50 kobo each to existing shareholders at 38 kobo per share. Wapic Insurance’s share price dropped 5.41 per cent at the weekend to 35 kobo per share.
The rights issue will be pre-allotted to shareholders on the register of the insurance company as at the close of business on Thursday September 19, 2019 on the basis of seven new ordinary shares of 50 kobo each for every six ordinary shares of 50 kobo each already held.
Already, Wapic Insurance has submitted application to the Nigerian Stock Exchange (NSE) for regulatory approval that will allow the publicly quoted insurance company to list the additional shares to be issued under the rights issue on the NSE.
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. Insurance companies are required to comply fully with the new minimum capital base by June 30, 2020.
In anticipation of increase in minimum capital requirements for insurers, shareholders of Wapic insurance had in 2017 given approval to the board of the company t raise up to N10 billion in new capital to bolster the insurance company’s capital base.
Wapic Insurance Plc Chairman Mr. Aigboje Aig-Imoukhuede had explained that the company was being proactive with the new capital raising plan.
“The company is approaching its shareholders at this time to seek approval to raise additional capital as a proactive step towards getting the company ready and set for a much-anticipated regulatory increase in the minimum capital of insurancecompanies,”Aig-Imoukhuede said.
He noted that a similar regulatory capital increase was imposed on the banking industry during the consolidation era and only the banks that were proactive in raising the required capital emerged as winners.
