Nicoz-Diamond Rights Issue Gets 67 Percent Response

Harare, Dec 21, 2009 (The Herald/All Africa Global Media via COMTEX) -- SHORT-TERM insurance giant, Nicoz-Diamond's US$4 million rights issue offer received a 67 percent response from shareholders with the remainder snatched up by underwriters.

Proceeds of the rights issue are meant to capitalise the group and prop up its underwriting capacity as well as to recapitalise its subsidiary in Uganda and upgrade its ageing ICT infrastructure.

Company secretary Ms Gloria Zvaravanhu said 159 842 772 ordinary rights offer shares were offered with 107 716 387 being subscribed.

Ordinary shares issued to the underwriters, ZABG and CBZ Bank Limited amounted to 52 126 365 shares.

The Zimbabwe Stock Exchange-listed NicozDiamond had indicated before the rights offer that assuming all shareholders followed their rights, the shareholding would remain unchanged.

However, there is going to be significant changes in the shareholding structure of NicozDiamond since the rights issue received a 67 percent response with underwriters taking the balance.

Prior to the rights offer shareholders, with 2 percent of the company's issued shares capital, held 74,85 of the company's total shareholding.

Minority shareholders held 25,15 percent of the short-term insurer while non-resident shareholders accounted for just about 9 percent.

The rights issue offer opened on November 16 and closed on December 4.

Following the rights offer, a total of 559 450 370 ordinary shares would be issued while 240 549 630 authorised but unissued ordinary shares would be placed under the control of the directors.

The group's equity has therefore increased to US$16,6 million from US$12,7 million.

NicozDiamond used to underwrite close to US$50 million worth of business, more than the whole of Malawi, Zambia and Uganda combined, but this had drastically reduced owing to a weak balance sheet.

In the half year ended June 2009, the group managed US$2,5 million net premium while profit after tax stood at only US$944 000.

The global financial crisis and Zimbabwe's economic decline slowed down economic activity resulting in most insurance clients deliberately opting to limit their spending on insurance.

Customers failed to raise adequate liquidity to meet annual premiums.

NicozDiamond that was formed out of the merger of the business of National Insurance Company of Zimbabwe Limited and Diamond Insurance Limited has got a subsidiary in Uganda, FICO in which it holds 80 percent shareholding.

The group also has a short-term insurance firm in Zambia and in Zimbabwe the company boasts of various investments in banking, funeral insurance, asset management, panel beating and a 100 percent owned property investment.