Qatar Insurance Company (QIC), whose 70% of business comes from international franchise, is considering 1:10 stock split whereby each share will be subdivided into 10 shares, a move that ought to enhance the liquidity of the scrip and thus help in price discovery.
The face value of QIC shares now at QR10 per piece will be reduced to QR1 after split, a company spokesman said after Tuesday’s board meeting, presided over by Sheikh Khalid bin Mohamed bin Ali al-Thani, chairman and managing director.
Lower price would entice more day traders and smaller investors to participate in the trading activity thereby increasing the liquidity of QIC’s stock, the spokesman said, adding improved liquidity will prompt international and large investors to invest more in QIC’s equity thereby improving the price and valuation of QIC stock further.
“The board foresees the positive results of changing the nominal value of the company’s share to QR1 from QR10 and the resulting increase in the liquidity of the share in the stock exchange and thus an increase in the stock price and increase shareholders value,” he said.
The board approved the initiation of such procedures on the meeting held on April 25, 2017, in order to execute the decision taken by the extraordinary general meeting held February 21, 2017. “We are still awaiting the directions of the Qatar Financial Markets Authority,” the spokesman said, adding (QIC) board found that the prevailing circumstances warranted the implementation of the assembly decision to initiate the procedures for the implementation of stock split.
QIC is the first listed entity to announce the move, almost two years after the Article 152 of the new Commercial Companies Act No 11 of 2015 allowed the nominal value of the share to be between QR1and QR100.
Highlighting its strategic objective of diversity and geographic expansion, QIC group president and chief executive Khalifa Abdulla Turki al-Subaey said this diversification of business has been achieved through the group’s subsidiary, Qatar Re, which is based in Bermuda.
Qatar Re – which was ranked among the top 35 global non-life reinsurers by insurance rating agency A M Best – has expanded its business globally and established offices in the major global reinsurance hubs such as Singapore, Zurich and a representative office in London.
The QIC group also succeeded in diversifying its business through its Lloyds operations, Antares, which is located in one of the world’s most important insurance markets. The syndicate underwrites specialised insurance risks, contributing to the diversity of the group’s business, both geographically and through products. In 2016 the company joined the Lloyd’s China platform in Shanghai, China.
The group also managed to expand its direct insurance activity in the continent of Europe through its Malta-based subsidiary Qatar Europe.
Highlighting that the financial strength of the group has contributed to maintaining its credit rating from Standard and Poor’s “A” stable and A M Best’s “A” excellent; al-Subaey said the continued growth of the group’s business globally reflected its utmost commitment for creating shareholders’ value and reflecting its dedication towards implementing the group’s strategic plan successfully in a difficult economic and political environment.