Company to sell part of land investment and shares
ABU DHABI/December 14-2020: The shareholders of Al Khazna Insurance Company gave the green signal to reduce the company’s paid-up capital from AED420 million to AED100 million, thus pruning the share capital by AED320 million or 76 per cent.
This exercise will help extinguish a large part of the accumulated losses that amounted to AED411.36 million as of the end of the fiscal year ending December 31, 2019.
The shareholders have also endorsed the board to consider the use of the legal reserve and the balance of the insurance premium in full to extinguish another part of the accumulated losses while complying with the provisions of Articles 202, 203, 204 of Federal Law No 2 of 2015 regarding commercial companies.
Al Khazna has been going through tough times for the past few years as it has been grappling with losses in most of the recent past quarters.
Poor performance in 2019
In 2019, underwriting loss posted by the company was to the tune of AED24.8 million. Due to suspension, company couldn’t issue policies during the period and as a result, gross written premium fell to as low as AED429,475.
The company could confine its net loss during the period to AED13.95 million with the help of investment profit of AED22.6 million, the company earned during the period.
Five-year revival plan
Al Khazna Insurance Company has prepared and approved a five-year corrective plan and an integrated strategy with the help of the international consultancy company, Grand Thornton.
The plan will address the financial, technical and administrative issues of the company and is also expected to provide solution for the company’s large accumulated losses.
This plan, the company hopes, will reduce the accumulated losses to less than 20 per cent and lead the company into profitability in a phased manner.
To sell investments
In line with the requirements of Insurance Authority Resolution No 25 of 2014 regarding the financial instructions for insurance companies, the company has decided to sell the investment lands and the portfolio of shares owned by the company in part, or in whole, and to authorise the board of directors to carry this out.
More importantly, the company will move ahead with reducing the number of members of the board of directors from 11 to 7 and amend the Article of Association of the company accordingly.
Resignation of directors
The chairman, Khalifa Mohamed Abdul Aziz Rubaya Al Muhairi, has announced the resignation of two of the existing board members, Rubaya Mohamed Al Muhairi and Ateeq Fitr Al Rumaithi, and the appointment of Kuber Rai as an independent board member, which was approved by the AGM.