NUCS Cooperative Insurance Services Limited (NUCS-CIS), an agency established 26 years ago to provide general insurance services to the cooperative movement in Jamaica, on Tuesday formally launched a share offer to raise $30 million in equity capital.
NUCS-CIS plans to use proceeds to position for new business anticipated from the pending change in the regulatory structure for credit unions - a $52-billion sector by assets.
The agency currently has $41.8 million in combined share capital and reserves, with $19.4 million representing issued capital.
And its ownership is currently split among two shareholders - the Jamaica Cooperative Credit Union League with 70 per cent of the shares and the National Union of Cooperative Societies owning the remaining 30 per cent.
Opened october 1
The three-month offer which opened on October 1 is priced at $1 per share, with each applicant being allowed a minimum of 500,000 shares.
Of this minimum, 100,000 units must be purchased at the time the application for shares is being made, while the balance is to be taken up within 12 months of the initial purchase.
The offer, which closes December 31, is expected to be subscribed by credit unions and other cooperatives.
The shares will carry the right to a dividend payable in Jamaican dollars annually and also the right to vote at annual and special general meetings of the society.
"The additional capital would be used to implement a new technology platform and provide working capital support to increase the business development and revenue-generating capacity of the society," NUCS-CIS stated in its prospectus.
Assisting credit unions
It also said it was preparing to assist credit unions to meet requirements to be adopted under the soon-to-be-enacted Bank of Jamaica Credit Union Regulations that would bring the sector under the regulatory ambit of the central bank.
The process is now expected to be finalised in December 2009.
Providing it hits the $30-million target, NUCS-CIS said it would invest $15 million in the new technology platform that will allow for connectivity between itself, insurance companies and credit unions.
The other $15 million will be used for short-term working capital support.
"NUCS-CIS is expected to improve the interface with the credit union movement which will certainly result in improved revenue streams and greater net surplus positions," the agency stated in the analysis of its financial condition.
NUCS-CIS, since 1983, has been providing general insurance services to the cooperative movement in Jamaica which currently has savings totalling $42.5 billion.
For the eight months ending August 2009, NUCS-CIS generated revenues of $18.1 million, with the main revenue stream of commission income accounting for 73.4 per cent.
At year end, commission income is expected to reflect at least a 15 per cent increase over previous year's performance when the agency earned $17.4 million.
NUCS-CIS' net surplus for January to August amounted to $4.3 million, while its asset base stands at $68 million compared to $65 million at December 2008.
As the regulatory environment for credit unions changes, NUCS-CIS has developed a five-year strategic plan aimed at growing business by insuring larger pools of credit union loans.
More broadly, the agency plans to reach for markets beyond Jamaica and into the wider Caribbean.
"Our vision is that NUCS will evolve into a brokerage and later into a general insurance company serving cooperatives in Jamaica and in the wider Caribbean," said chairman Barrington Whyte, "and, at this stage of our development, we will need additional capital support to expand this operation and to make this vision a reality."
sabrina.gordon@gleanerjm.com