Capital increase, trustee’s reinsurance strategy to increase holding capacity
to report Financial news According to public relations, Amin Reinsurance Company plans to increase its capital from 8,000 billion Rials to 12,400 billion Rials in addition to achieving goals such as optimizing and reforming the company’s financial structure in order to maintain the company’s share and position in the country’s reinsurance market. , preservation and protection of equity and capital in the conditions of currency fluctuations and inflation, to significantly increase the allowed maintenance capacity and insurance power of the company so that the company is able to maintain its own share in the reinsurance market and in addition to stabilize and strengthen the position of the company.
Due to the currency fluctuations that caused a significant and significant decrease in the currency equivalent of the cash assets of insurance companies and reinsurers, the level of financial prosperity and the allowed capacity of domestic insurers, both direct and reinsurers, to cover foreign exchange risks has also faced a proportional decrease.
However, a brief review of the explanatory report of the company’s board of directors shows that the holding share of Amin Reinsurance Company (common stock) has increased from 82% on 06/31/2013 to 93% on 12/29/2014, but in contrast to the ratio of the company’s total investments to total assets decreased from 82% to 79% in the same period.
The table of financial ratios of the company shows that the ratio of cash assets to total assets has decreased from 83% to 80% in the same period.
Considering the necessity of maintaining and increasing the company’s risk-accepting capacity and preventing the violation of the rights of insurers, it seems that increasing capital from cash claims and contributions, accumulated profits and capital reserves is the most reliable and attainable strategy in order to achieve plans and goals. This is the company. Because the permitted capacity to maintain and accept risk of a company has a direct relationship with the increase in capital, especially in the conditions of currency, commercial and functional fluctuations, and the increase in capital will increase the company’s financial ability to fulfill insurance obligations and maintain and stabilize the company’s position in the reinsurance market.
On the other hand, it should be noted that due to the special conditions of banking and economic sanctions, the country’s insurance market is forced to provide its required reinsurance coverage based on the facilities, capabilities and capacity of reinsurance and central insurance companies and companies with reinsurance licenses.
It is also necessary to pay attention to the fact that today we are witnessing the continuous growth of the insurance penetration rate, which has caused a quantitative and qualitative increase in the risks covered and the growth of insurance premium production in the overall insurance market. Therefore, the necessity of strengthening and developing Amin reinsurance company along with other reinsurance companies is felt.
The analysis of the explanatory report of the board of directors of Amin Reinsurance Company shows that increasing the capital of the company can be considered the most appropriate option to deal with the decrease in the level of the company’s financial strength in order to fulfill the obligations for insurance policy damage, especially currency insurance policies.