Consolidated Hallmark Insurance(CHI) Plc is planning to adopt a Holding Company(HoldCo) structure for value maximisation and operational efficiency.
The chairman, CHI, Mr Obinna Ekezie, while addressing shareholders at the Court-Ordered Meeting of the Holders of the Fully Paid Shares of Consolidated Hallmark Insurance Plc, in Ikeja, Lagos, yesterday, noted that, the restructure would allow the insurer transfer the shares of its shareholders to a holding company comprising of CHI and its subsidiaries.
Stating that the restructure will culminate in the migration of the company’s shareholders to the HoldCo via a Scheme of Arrangement pursuant to the provisions of Section 715 of CAMA and the Securities and Exchange Commission(SEC) rules and regulations, he added that, the scheme is subject to shareholders’ approval and sanction of the Federal High Court.
While applauding the shareholders for the approval, he said, the operations of the restructured group will be similar to those of the major global financial institutions, including businesses that Consolidated Hallmark consider to be its peers and competitors.
“The board anticipates that the restructured group will benefit from greater flexibility to adapt to the rapidly evolving financial landscape, and take timely advantage of value accretive opportunities due to a simplified corporate structure. In addition, the restructure will create potential economies of scale, as well as a more efficient and effective diversification of the company’s revenue source,” he pointed out.
While confirming the requisite Approval-In-Principle has been received from the National Insurance Commission(NAICOM) and SEC in respect of the scheme, he added that, the HoldCo structure will improve Consolidated Hallmark’s valuation by creating a structure where each subsidiary is able to operate a focused business.
“The structure will streamline the group’s structure to deliver operational and cost synergies to the business. This will lead to improved financial performance and reduced risk exposure across all its subsidiaries. It will also lead to reduced regulatory exposure, stronger credit rating, tax minimisation, fund raising, operational efficiency and strategic positioning,” he added.
Promising that the company considers the restructure to be the most appropriate approach to create greater strategic flexibility and improve returns to shareholders, he pointed out that, the restructure is intended to mark a new chapter for the company and the group, and enables the entities become intentional about the next phase of growth and impact on the Nigerian insurance industry.
Chairman emeritus, Independent Shareholders Association of Nigeria(ISAN), Sir Sunny Nwosu, who was elated with this new move, noted that, the shareholders are more than happy to approve the restructuring as it provides a platform for shareholders to get more improved returns on their investments.
“I will like to applaud the management and board of directors of CHI for this giant step as nobody stands to lose anything. The board is not losing neither the shareholders, which gives good values. On behalf of shareholders that I am representing, we approve the restructure,” he said.
However, the company is expected to approach the Federal High Court with the resolution of the meeting to legalise the restructure.
