A number of local insurance companies have in recent days announced proposed mergers among themselves or the reduction of capital to write off accumulated losses.
Among the companies, Solidarity Saudi Takaful Co and Aljazira Takaful Ta'awuni Co have signed a non-binding memorandum of understanding to enter into discussions regarding the terms and conditions of a merger between the two companies.
The two companies indicated, in statements to Tadawul on 21 January that the MoU marks the start of the verification and examination process for the technical, financial, legal and actuarial aspects of the merger.
Aljazira will amend its book value to include the net combined assets of the takaful portfolio transferred from the Aljazira Bank to the company, as at the beginning of this year. The MoU will be valid until both companies sign a merger agreement or till 30 September 2020, whichever is earlier.
Separately, the board of directors of Walaa Cooperative Insurance Co called on the shareholders to attend an extraordinary general meeting on 27 January to approve a capital increase, and to vote on a proposed merger with Metlife AIG ANB. The two parties signed a merger agreement last September. To effect the merger, which would mean Walaa absorbing Metlife AIG ANB, Walaa is also seeking to increase its capital. Metlife AIG ANB shareholders will be given shares in Walaa.
Meanwhile, the board of directors of Saudi Enaya Cooperative Insurance proposed to halve the company's capital from SAR300m ($80m) to SAR150m to write off accumulated losses.
The reduction of the capital will be effected by cancelling 15m shares of the company, reducing one share for every two shares.
The company said that there will be no material impact from the reduction of the capital on the company's financial, operational or organisational obligations, operations or performance. The percentage of shares held by any shareholder will not change as a result of the capital reduction.
Separately, the board of directors of Allied Cooperative Insurance Group (ACIG) has recommended reducing the capital of the company, and then increasing it by offering rights shares.
According to the company’s statement lodged with Tadawul, the proposal is to reduce the capital by 29.5% from SAR200m to SAR141m, reducing the number of shares from 20mto 14.1m.
ACIG added that 5.9m shares of the company will be cancelled to write off accumulated losses. At the same time, the company’s board of directors recommended an increase in company's capital through a rights issue which would raise SAR150m. An extraordinary general meeting would be held for shareholders to approve the capital restructuring.
According to the SAMA website, there are 33 insurance and reinsurance companies operating in the kingdom at present.