SUNU Assurances Share Price to Hit N1 After Reconstruction

April 8, 2020
SUNU Assurances Nigeria

By Modupe Gbadeyanka

The board of SUNU Assurances Nigeria Plc said it expects the share price of the company to rise to N1 per unit on the Nigerian Stock Exchange (NSE) after the completion of its proposed share capital reconstruction.

Business Post reports that SUNU Assurances is planning to reduce its present 14 billion shares outstanding by 11.2 billion to 2.8 billion.

The management said after the exercise, the share price of the company should increase to N1 per unit from 20 kobo it traded at the close of business on Tuesday, April 8, 2020.

“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,” SUNU Assurances said.

The insurer explained that the aim of the share capital reconstruction is mainly to raise its capital base in compliance with the new requirements of the National Insurance Commission (NAICOM).

In 2019, the industry regulator directed operators to increase their capital base on or before December 31, 2020.

NAICOM increased the minimum paid-up share capital of a life insurance company to N8 billion from N2 billion, non-life insurance was raised to N10 billion from N3 billion, composite insurance was moved to N18 billion from N5 billion, while re-insurance was jerked up to N20 billion from N10 billion.

SUNU Assurances, which operates under the non-life insurance category, said as at September 30, 2019, its paid up capital stood at N2.3 billion, about N7.7 billion less than the new capital base.

In order to meet up with the new requirement, the company said it is considering reducing its share capital so as to “allow for the issuance of new ordinary shares by way of a rights issue and private placement.”

Recall that at an Extraordinary General Meeting (EGM), shareholders authorised the board to cancel four ordinary shares out of every five held by the company’s investors.

Modupe Gbadeyanka

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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