DUBAI: Abu Dhabi National Insurance Company (Adnic) plans to boost its capital by Dh390 million ($106 million), it said on Monday, and several sources said it would do this with a convertible bond issue.
The company has posted a run of weak earnings due to a poor underwriting performance on core commercial business lines, leaving the insurer needing to shore up its reserves.
Adnic is looking to sell a convertible bond as soon as the first quarter, two sources with knowledge of the matter said.
One Abu Dhabi-based source the issue would be a mandatory convertible, meaning the bonds will automatically turn into Adnic shares at the end of the bond’s life.
Convertible bonds are rare in the Gulf region, with only a couple of companies ever having issued them.
Three sources with knowledge of the matter said National Bank of Abu Dhabi had been appointed to arrange the issue.
A spokesman for Adnic confirmed it was planning to boost its capital by Dh390 million, although he said no lead manager had yet been appointed for the transaction.
He also declined to elaborate on the manner of the capital increase, or the time frame.
Adnic, owned 23.8 per cent by the state-owned fund Abu Dhabi Investment Council, has been seeking to strengthen its capital adequacy since the middle of last year, the two sources said.
The Abu Dhabi-based source said the unusual structure being considered had delayed the capital raising.
