By Santhosh V Perumal
Qatar Insurance Company (QIC), a dominant risk provider, is raising $250mn (QR910mn) by issuing convertible notes to the General Retirement and Social Insurance Authority (GRSA) as part of its efforts to shore up the capital base and strengthen the solvency regime.
“As per the solvency and capital adequacy reviews conducted by the company, it is projected that we need to increase the capital at the end of 2015 or during 2016, in line with the projected future expansion plans,” QIC vice chairman Abdullah bin Khalifa al-Attiyah said, officiating as the chairman of the general assembly of shareholders.
Based on the reviews and analysis, the QCI board has resolved to issue convertible notes totalling $250mn with maturity of five years and annual coupon, which is yet to be agreed upon.
The notes, which could be converted any time after three years of issuance and priced at a premium once converted, will not exceed 8mn shares, which represent only 5% of the current share capital.
While preparing the future business plan for the coming years, the company has factored in the targeted expansion in the global and reinsurance activities, in addition to the expected growth in the local and regional operations (direct insurance) as a result of the upcoming infrastructure development projects planned across the region, al-Attiyah said.
Together with these projected business plans, he said, “QIC has conducted appropriate reviews and analysis to ensure that the solvency and the capital adequacy norms are maintained to meet the anticipated future expansion in activities that would be sufficient to bring us to the level of international standards adopted by global insurance and reinsurance supervisory and regulatory bodies.”
The GRSA has offered to solely and fully acquire these convertible notes. The board agreed to this offer taking into consideration that the national capital has to be given priority in any future expansion plans of the company, and also because the GRSA is a government entity and as such, no limit is imposed upon the number of shares it can hold in the company as per Article (7) of the company’s amended Articles of Association.
QIC, which led the domestic insurance companies consortium in covering one of the major projects of Doha Metro, has successfully acquired the UK-based Lloyds Syndicate operations Antares Holdings Limited in a QR1bn-plus deal, which was fully financed through its internal funds.
Currently, Antares Holdings, together with the reinsurance company of QIC ‘Qatar Re’, constitutes the key pillars of QIC’s international operations which currently represent around 60% of the overall insurance revenue for QIC. This was reflected in the net profit of QR780mn achieved at the end of September 30 compared to QR535mn during the same period of last year.
The mammoth infrastructure development programme, in the run-up to both 2022 FIFA World Cup and 2019 World Athletics Championship, has provided ample opportunities to the insurance sector, prompting many global players to set their foot in Qatar.
