A strategic step to enhance financial solvency
The board of directors of United Cooperative Assurance Group (ACIG), a company listed on the Saudi Stock Exchange (Tadawul), announced its recommendation to increase the company's capital from SAR 291 million to SAR 300 million. This strategic move comes as part of the company's efforts to strengthen its capital base and financial solvency, enabling it to expand its insurance activities and keep pace with the anticipated growth in the Saudi market.
Details of the capital increase process
The company explained in its statement that the proposed capital increase of SAR 9 million will be achieved through a rights issue, with existing shareholders having their pre-emptive rights suspended. Nine hundred thousand new ordinary shares will be issued, with a par value of SAR 10 per share and a matching offering price. These shares will be allocated entirely to Diyar Arabia Investment Company, a strategic partner, which will own 3% of Aseeg's total share capital upon completion of the transaction.
General context and importance of the step in the insurance sector
Capital increases are a crucial measure for insurance companies, as their ability to bear risks and meet their obligations to policyholders is directly linked to the strength of their financial position. In Saudi Arabia, the insurance sector is subject to strict supervision and regulation by the Saudi Central Bank (SAMA), which sets specific solvency standards to ensure the sector's stability and protect policyholders' rights. This capital increase enables Aseeg to efficiently comply with, and even exceed, these regulatory requirements, thereby enhancing the confidence of both customers and investors.
Expected impact on the company and the Saudi market
This recommendation is expected to have a multifaceted positive impact. Domestically, the increase will provide the company with additional liquidity that can be directed towards developing new insurance products, improving its technological infrastructure, and expanding its market share. Furthermore, the entry of a strategic partner like Diyar Arabia Investment may open new avenues for commercial cooperation and bring diverse expertise to the board of directors. At the level of the Saudi financial market, this move reflects confidence in the future of the insurance sector as a key pillar of the Financial Sector Development Program within the Kingdom's Vision 2030, which aims to create strong financial entities capable of competing regionally and internationally.
Next steps
It should be noted that this recommendation is still in its initial stages, as its implementation depends on obtaining the necessary approvals from the relevant regulatory and supervisory bodies, most notably the Capital Market Authority and the Saudi Central Bank, in addition to the essential condition of obtaining the approval of the Extraordinary General Assembly of the company’s shareholders.
