Asia Ins to raise Rs200mln

KARACHI: Asia Insurance Company, a non-life insurer, will raise Rs200 million from the equity market to meet its paid-up capital requirement, a company’s executive said on Tuesday.   “The firm will raise Rs200 million from the Pakistan Stock Exchange to increase its paid-up capital to Rs500 million as per the legal requirement of the Securities and Exchange Commission of Pakistan (SECP),” said Muhammad Ali Raza, the company secretary.

In August last, the SECP set paid-up capital requirement for a non-life insurance company at Rs500 million and for a life insurer at Rs700 million. The SECP allows insurers to meet their capital requirements, in phases, till December 31, 2017.

At present, Asia Insurance Company’s paid-up capital stands at Rs300 million, Raza said.  “We are yet to determine the strategy to raise the capital; we can issue right shares to the existing shareholders or more ordinary shares [secondary public offering] to public,” he said.

“We have appointed Arif Habib Limited as lead manager and advisor to assist the company,” he added in a bourse filing.  The apex regulator said the paid-up capital requirement was increased to improve the capacity of the local insurers to underwrite larger risks and retain sizeable share. 

“This would indirectly help check outflow of the precious foreign exchange of the country that is going abroad in the shape of reinsurance premium,” it said.  “An increase in paid-up capital will ultimately contribute towards better solvency position of insurers.” 

The regulator further said requiring an insurer to maintain adequate and appropriate capital enhances the safety and soundness of the insurance sector and the financial system as a whole.  The non-life (general) insurance firm offers almost all the insurance policies, including marine, motors and travel.

The insurer has been operating in Pakistan since 1980. Its business grew 190 percent in 2013 and 98 percent in 2014. 

The company reported profit after tax at Rs53.80 million for the nine-month period ended September 30, 2015.

The SECP said capital serves to reduce the likelihood of a failure due to adverse losses incurred by the insurer over a ‘defined’ period, including decreases in the value of the assets and/or increases in the obligations of the insurer, and to reduce the magnitude of losses to policyholders in the event that the insurer fails.