Logo of Salama Cooperative Insurance Co.
Salama Cooperative Insurance Co.’s board of directors recommended, on March 16, a capital reduction by 60% to SAR 100 million from SAR 250 million, the insurer said in a bourse filing.
The capital restructuring is in line with Article 150 of the new Companies Law to cover the accumulated losses resulting mainly from higher claims incurred, other technical reserves, other underwriting expenses, as well as general and administrative expenses.
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Key Figures of the Capital Cut |
|
|
Current Capital |
SAR 250 mln |
|
Number of Shares |
25 mln |
|
Reduction (%) |
60% |
|
New Capital |
SAR 100 mln |
|
New Number of Shares |
10 mln |
|
Method |
Writing off 15 mln shares |
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Reason |
Restructuring the company’s capital to offset accumulated losses |
|
Date |
The second trading day after the company’s extraordinary general meeting (EGM) |
There is no impact of capital reduction on the company's financial obligations.
The capital and share recommendation is subject to the approval of the related official authorities, including the Saudi Central Bank (SAMA), Capital Market Authority (CMA) and EGM.
The insurer will make announcements after appointing the financial advisor and submitting the capital reduction request to the CMA, the statement noted.
Additionally, the board recommended using SAR 5 million from the statutory reserve, which represents the entire value of the statutory reserve as of Dec. 31, 2021, to cover part of the company’s accumulated losses. The decision will be submitted to the EGM for approval after obtaining statutory approvals from the relevant regulatory authorities.
Salama will announce any material developments on a timely basis, the statement said.
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