Bright Madera Corporate News
AFRE Corporation shareholders are set to meet on May 29 when they are expected to come up with a new figure for a proposed rights offer to bolster the operations of the group, which recently changed hands. Chief executive Douglas Hoto last month told an analyst and media briefing that the figure would be discussed at the Annual General Meeting.
The previous board had announced a possible US$15 million rights issue but management under Mr Hoto believes operations are viable and US$10 million should be enough to recapitalise the business mainly the insurance aspect.
The need to recapitalise its insurance units was also emphasised by the Insurance and Pension Commission.
Afre was asked to implement a raft of reforms after it emerged that its insurance business was prejudiced by delinquent former executives.
It seems Afre is heading for good times, basing on Mr Hoto’s projections and backing of the deep pocketed new shareholders of the company.
Early in the year, cash-rich NSSA acquired a controlling 52 percent stake in Afre and in the case of a rights issue NSSA would underwrite and further chances of increasing its shareholding.
Following the rights issue Afre is expected to fully capitalise and grow its business.
Mr Hoto believes his company can make significant profits judging from the performance of the group for the year ended December 31 2011, the time when the directors of the company were under investigation.
He, however, insisted that the company would go ahead with the proposed rights issue and the business required fresh capital.
For the full year to December 31, 2011 Afre recorded improved results backed by growth in-group business, with gross premium income growing 34 percent to US$80,4 million.
Medical savings contributed 39 percent to premiums followed by reinsurance weighing in 20 percent, 17 percent from employee benefits, 13 percent from life assurance and 10 percent from short-term insurance.
Net premium income for the period stood at US$67 million, up 42 percent from the prior period.
Rental income of US$6,7 million and investment income of US$13,8 million also boosted total income of US$88,7 million.
The investment income constituted a fair value gain of US$14,5 million on investment properties, up 96 percent from the prior period.
During the period under review, the group’s total assets grew 17 percent following a revaluation of the investment properties and growth in premium receivables from business written during the year.
The short-term insurance unit was adversely affected by challenges faced by the group last year with gross premium written declining from US$10,6 million to US$8,3 million.
The reinsurance businesses, however, recorded improved performance of US$16,3 million from US$12,4 million recorded during the prior year.
Going forward, the group is targeting US$86 million for gross premium income.
The previous management had projected a minimum net asset growth of 12 percent and a capital expenditure budget of US$6,6 million.
About US$2 million would be directed towards its property arm, Pearl, US$1,5 million for IT systems upgrade and about US$2 million towards upgrading its fleet.
The group made US$22,6 million total income, including unearned premium reserves in the first quarter of the year.
Gross premium income amounted to US$20 million against a budget of US$21 million while claims and expenses were US$7,2 million, which is 12 percent better than had been budgeted.
Meanwhile, Kingdom Financial Holdings shareholders would also be meeting on the same day to vote for change of name to AfriAsia-Kingdom.
AfriAsia Bank Limited of Mauritius gained 35 percent shareholding of KFHL and injected US$9,5 million into the bank to meet the central bank’s minimum capital requirements.
The investment completed the recapitalisation of KFHL, paving the way for the group to accelerate its strategic initiatives to consolidate the operations of its key subsidiaries.
Kingdom has been pursuing several initiatives to recapitalise its operations by raising US$25 million, comprising US$15 million equity and US$10 million debt  finance.
The capital-raising model sought to raise the required amount through a combination of a rights issue, private placement and public offering.
The equity capital raised was largely required to recapitalise Kingdom Bank Limited, the flagship banking subsidiary in the Kingdom stable.

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