Arab Insurance Group (Arig)has reported first-half profits more than double those of 2003 and has revived plans to raise capital though a rights issue. Net income rose to $12.2 million from $5.7 million while underwriting profits climbed to $5.8 million from $2.4 million, as the group's strategy of divesting non-core subsidiaries and refocusing on the core Middle East reinsurance business continued to pay dividends (Insurance, MEED Special Report, 18:6:04, pages 29-30).
Arig plans to increase its capital by $50 million through the issue of 50 million shares priced at $1 each. However, if the issue is oversubscribed, the company will allocate shares up to the value of $100 million. Arig shares were trading at about $2.1 on the Bahrain Stock Exchange on 19 July. Subscription will be open from 12-27 September. A previous effort to stage a $100 million rights issue in 2002 was thwarted when one of the major shareholders refused to underwrite the deal (MEED 1:11:02). 'When we were assigned our S&P [Standard & Poor's]rating in June, the agency said that we were well capitalised, which we are for our current book of business,' says Arig chief executive Udo Krueger. 'But we need new funds as we expand geographically - such as into the CIS [Commonwealth of Independent States], southern Asia and sub-Saharan Africa - and into new product areas, principally medical, life and Islamic insurance.' S&P assigned Arig a BBB long-term counterparty credit and insurer financial strength rating (MEED 25:6:04).
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