Salama Insurance BOD Reduces Capital to SR100 mln to Amortize Accumulated Losses

Salama cooperative insurance Company Board of Directors, recommended in the meeting which was held on 16.03.2022 to call for the extraordinary general assembly for the following:

• Reducing the company’s capital from SR250,000,000 to SR100,000,000. The percentage of capital decrease is 60 %.

The company said in a statement on Tadawul on Thursday that number of shares before decrease is SR 250,000,000, while the number of shares after decrease is 100,000,000.

Reasons for the capital decrease restructuring the company’s capital in line with Article 150 of the new Companies Law to cover the accumulated losses resulting mainly from:

Increase in claims incurred

Increase in other technical reserves

Increase in other underwriting expenses

Increase in general and administrative expenses

The company indicated that the method of capital decrease is cancellation of 15,000,000 shares of the company and there is no impact of reduction of the company’s capital on its financial obligations.

It added that the end of the second trading day after the Extra Ordinary General Assembly Meeting in which decrease was resolved

It also added the recommendation to reduce the company’s capital and number of shares is subject to the approval of the related official authorities including SAMA and the Capital Market Authority, and the approval of the extraordinary general assembly.

The announcement will be made upon appointment of the financial advisor, as well as when the capital reduction request is submitted to the Capital Market Authority.

The Board of Directors also recommended the use of an amount of (SR5,003) thousand from the statutory reserve, which represents the entire value of the statutory reserve as at December 31, 2021, in order to cover part of the company’s accumulated losses, and the decision will be submitted to the extraordinary general assembly for approval, after obtaining the Statutory approvals from the relevant regulatory authorities, and the company will announce any material developments on timely basis.