LASACO Assurance Plc recently turned 40 years, having weathered the storm of the harsh operating environment, different regulatory policies and also continually delivering value to its shareholders, while remaining a corporate institution that is contributing to economic growth. Segun Balogun, managing director/CEO of the Company in this interview with Modestus Anaesoronye shares his thought on where the coming is coming from, where it is now and what it plans to do in the future. Excerpt:
LASACO is 40 years now, what does this mean for the company and where are you going from here?
At 40, we are happy that the company is growing and we have just elevated the company headquarters to a modern building that can compare to any modern office anywhere in the world. Today, we have a new and rebranded LASACO. We have branches in South West, South, North and Abuja. We are not too present in the East but this is one of our next growth areas where we may begin to expand to soon.
The insurance industry is embarking on a recapitalization, what is LASACO doing about this?
NAICOM came up with a paid up capital requirement, which is higher than what the initial tier proposal was required of us. But for us at LASACO, what we have done is one, to reconstruct our shares. We currently have over 7 billion units of shares that have been to issued over 37,000 Nigerians at 50 kobo. So we said, to achieve the recapitalisation plan, we will reconstruct the shares to the extent that the number of shares that have been issued becomes less. So instead of over 7 billion shares that has been issued, we want to have one third of that which is about 2 billion plus. SO, we still have almost 8 billion of shares unissued. In addition to reconstructing the shares, what that also means is that if you have one unit of shares of LASACO, instead of the one unit being valued at 30 kobo or 40 kobo, it means one unit of shares of LASACO will now be that amount multiplied by three. At the par value, 50kobo multiplied by 3 is N1.50kobo for one unit of shares. At the price of 30 kobo which it is currently trading, the value of share of LASACO will now 90 kobo. What this means for investors is that instead of you getting dividend of 3 kobo like we paid in 2017, 4 kobo like we paid in 2018, it then means that what will be paid will be more significant. Instead of paying 3 kobo, it will be 9 kobo, instead of 4 kobo, it will be 12 kobo and this will be more meaningful. Even at 3 kobo that was paid, if you look at all the quoted companies in Nigeria, you don’t have many companies paying as much as 10 percent of the value of shares as dividend. If the value of your share is 30 kobo and you pay 3 kobo, that is 10 per cent. If the value of your share is 40 kobo and you pay 4 kobo, that is 12.5 percent. The big companies of Nigeria that their shares are priced at N30, N40, N120, N150, the kind of dividend they pay, by the time you put the dividend payment over the value of the shares, it is usually not as high as 10 percent or 12.5 percent. Yes, you can say, this is in kobo, but in terms of the ratio of the dividend we are paying over the stock, its more meaningful. You are getting better returns on your investment than the bigger ones.
After the reconstruction, we decided to increase the number of units of shares that we have. Like I said, we have 7 billion shares which will reduce to a little over N2 billion. We also said we should increase the authorized share capital from 10 billion units to 20 billion units. Just today, we got approval from the Corporate Affairs Commission, saying that our authorised share capital has been increased from 10 billion units to 20 billion units.
What this means is that we have almost 18 billion units of shares to issue. The issue or challenge is not increasing the authorized share capital to accommodate the increase we want to do. The issue is where the money will come from. So what we have done as a company because have about 37,000 shareholders. Our top 50 shareholders control about 70 percent of the shareholding and we have top 10 controlling almost 60 percent. What we have done is to engage these top 10 shareholders that this is the plan. We are going to offer rights and also do private placement because there are individuals and companies that have shown interest to buy into LASACO. What we were waiting for is this document so that we can then go to the Securities and Exchange Commission seek for approval to come to the public to raise money. The top 10 shareholders have told us that they are with us all the way because we give them good dividend. They said they are just waiting for us to come to the public and say you are selling your shares and they will bring in the money. So we have very good assurances that the current major shareholders of LASACO will bring money to fulfill the recapitalization plan.
But for any good manager, we will always have contingency plan. We also have contingency plans that are very clear and possible, that in case of any failure which we don’t expect because we have firm assurances from the shareholders that they are bringing more money, so that we don’t have a situation that we are not fully recapitalized. There are also other plans on ground.
With respect to recapitalization, we have N4 billion and we are going to N18 billion because we are a composite company that operates both life and non life. So, we are looking for N13.4 billion and we have firm assurances that shareholders will bring in money.
Good enough, NAICOM extended the deadline to December 2020. Our plans are to work as if the deadline is June 2020. So by April, 2020, we should be done with our recapitalization plan.
Post recapitalisation, what is the future plan of LASACO?
The future plan of LASACO is to diversify. For insurance companies all over world that are making good returns, it is not just insurance operations alone. They diversify into other sector of the economy to augment the income that is made from insurance. Our future plan is to be a player in the hospitality and real estate industry. So in the next couple of years, you will see LASACO play in hospitality, real estate and the digital world.
