Sovereign Trust Insurance (STI) Plc is seeking to raise about N1.42 billion new equity capital from its shareholders.
Regulatory documents obtained at the weekend indicated that Sovereign Trust Insurance plans to issue some 2.84 billion ordinary shares of 50 kobo each at par to existing shareholders of the insurance company.
As a rights issue, the shares will be pre-allotted to shareholders on the register of the insurance company as at Friday, July 22, 2022 on the basis of one new ordinary share for every four ordinary shares held.
The rights issue is expected to be completed this quarter and subsequently listed on the Nigerian Exchange (NGX).
The planned capital raising will be the second major fund raising by STI in four years. It had in 2019 raised N2.09 billion from its shareholders. STI had offered 4.17 billion ordinary shares of 50 kobo each at 50 kobo per share.
Shareholders of STI had in 2019 approved a new capital raising plan for the insurance company. Shareholders had authorised the board of the company to create 5.0 billion new ordinary shares of 50 kobo each to increase its authorised share capital to N10 billion of 20.0 billion ordinary shares of 50 kobo each.
Shareholders also approved the proposal to raise “additional equity capital for the company up to the maximum of the authorised share capital” with additional mandate to the board to absorb excess money in the event of oversubscription of the initial offer.
The National Insurance Commission (NAICOM) had in May 2019 released new capital requirements for insurance businesses with directive 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. While the new capital requirements have been suspended, any insurance companies are taking proactive steps to rebuild their capital base.
NAICOM recently revoked the operating licences of two insurance companies over their inability to meet their financial obligations.