Kampala bourse listed National Insurance Corporation (NIC) has posted a 25.74 per cent increase in profit after tax ahead of its planned cash call which is expected before the end of this year.
The insurance firm, which last month submitted an application to Uganda’s capital markets regulators for the approval of a planned rights issue, said that profit after tax rose to Ush2.32 billion ($897,316) for the half year period ended June 2013 compared to Ush1.85 billion ($748,845) posted over a similar period in 2012.
Folayan Bayo, managing director, NIC said that the company’s performance had improved after settlement of a dispute that involved Makerere University, which led to negative publicity affecting the insurer’s profitability.
“The continuous improvement in performance figures portends well for the future outlook of NIC and shows the company is beginning to emerge from the effects of the negative publicity arising from the previously strained relationship with a key client,” said Mr Bayo in a statement.
Gross premium rose by 17.2 per cent to Ush4.43 billion ($1.7 million) over the first six months of this year from Ush3.78 billion ($1.5 million) posted over the first six months of last year.
The insurer first announced that that it was planning a rights issue in November last year and disclosures contained in its December 2011 annual report show that shareholders had approved the increase of its authorized share capital and paid up share capital, paving way for the cash call.
At the beginning of last month, NIC said that it had submitted the application to Uganda’s Capital Markets Authority and the Uganda Securities Exchange (USE), an indication that the rights issue could occur before the end of this year.
“The implementation of the resolution on the rights issue which is currently at an advanced stage will provide new capital needed for business expansion with expected increase in turnover and market share,” said Mr Bayo.
NIC, whose stock at the USE last traded at Ush35 ($0.01), the same price at which it closed the end of last year, has not given details on how many shares will be offered to existing shareholders during the cash call and at what price.
USE data shows that in the first nine months of this year, 2.7 million shares of the insurer worth ($36,500) had been traded.
At the insurers latest annual general meeting that was held at the beginning of September this year, shareholders approved the establishment of long term and general insurance business subsidiaries, separating its two main business lines which have different levels of risk.
Mr Bayo said that the establishment of the two new insurance subsidiaries will ensure the deployment of adequate resources towards developing different lines of insurance business, improving professionalism, creating efficiencies and increasing value for shareholders.