Cornerstone Insurance Plc has proposed bonus shares for its shareholders.
According to a statement made available to the investing public through the Nigerian Stock Exchange, this is part of the insurer’s plans to meet its recapitalisation mandate.
The firm said the resolution on bonus shares was reached when its board of directors met on July 22, 2020.
The bonus shares will be issued in the proportion of seven new shares for every 30 shares of 50 kobo each, already held by shareholders.
“In line with Rule 19.2 (a) of the Issuers Rules Relating to Board Meetings and General Meetings of Issuers, Cornerstone Insurance PLC (‘The Company’) wishes to inform its esteemed Shareholders, Stakeholders, The Nigerian Stock Exchange (‘The Exchange’) and the general public that at the Board Meeting of the Company held on July 22, 2020, the following resolutions were duly considered and approved…
“The transfer of N1.718bn from the Company’s share premium account to the share capital account by issuing bonus shares in the proportion of seven new shares of 50 kobo each for every 30 existing shares of 50 kobo each, to achieve the Company’s recapitalisation plan,” the statement read in part.
The planned bonus share issuance is subject to shareholders’ approval during the company’s next annual general meeting.
Cornerstone has had to grapple with the challenges of meeting the recapitalisation mandate set by National Insurance Commission. The company prospected several options to this end, including a deliberated merger and the eventual decision to sell some of its landed property.
With this bonus share issuance, Cornerstone will finally be able to meet the required share capital, even as the shareholders get to own additional shares in the company without incurring additional costs.
In May 2019, NAICOM mandated all insurance companies in Nigeria to recapitalise. Since then, the deadline for compliance has been extended more than twice. The latest extension to the compliance deadline was given last month by NAICOM.
In view of this, the insurance firms were given additional year to recapitalise, with the final deadline being September 2021.
The recapitalisation programme requires life insurance firms to meet a minimum paid-up capital of N8bn, from N2bn previously. In the same vein, general insurance companies are required to raise their minimum paid-up capital to N10bn from N3bn.
Also, the regulatory capital for composite insurance was raised to N18bn from N5bn while reinsurance businesses are now required to have a minimum capital of N20bn from the previous N10bn.
