Rights issue will raise cash to meet Insurance Board requirements
October 27, 2012, 12:00 pm
Union Assurance PLC (UAL), a major player in the country’s insurance industry, is seeking to raise its stated capital to above Rs.1 billion to meet the Insurance Board of Sri Lanka’s requirement of a minimum capital of Rs.500 million on each class of insurance business – Life and General insurance.
As UAL carries out both Life and General insurance business, it will require a minimum stated capital of Rs.1 billion against its present stated capital of Rs.388.4 million.
UAL has therefore proposed that the additional capital required be raised through a rights issue of one new ordinary share for every seven already held at a price of Rs.70 per share.
The company has summoned an extraordinary general meeting on November 12 to consider a resolution for issuing up to 10.7 million new shares to existing shareholders of the company in the proportion of one for seven at an issue price of Rs.70 per share which in the view of the board is "fair and reasonable to the company and to all existing shareholders."
In a circular to shareholders, UAL has said that this capital infusion is being undertaken to fall in line with the capital requirements stipulated by the Insurance Board and also with a view to proactively meeting the requirements under the risk based capital framework that the Insurance Board is developing and will implement by 2015.
The UAL share had traded between a high of Rs.120 and a low of Rs.84 in the three months from July to September and traded on Friday on the CSE between Rs. 92 and Rs. 95.90 for a small quantity to 505 shares and closed at Rs. 92.