Hellaby's stake in Club Life to shrink
New life insurer Club Life plans to issue up to $2 million worth of shares to its brokers at the end of this year.
Thursday, October 4th 2001, 7:14AM
Club Life chief executive Naomi Ballantyne says the insurer doesn’t need $10 million of capital now because of its reinsurance arrangements. The purpose of the capital raising is simply to allow brokers who’ve supported Club Life to buy into the business.
"Whether or not they do doesn’t make any difference to our capital base," Ballantyne says.
"All that happens is that if we raise that amount of capital then we don’t need as much reinsurance funding."
She expects the issue to raise between $1 million and $2 million from brokers, of which Club Life currently has 275.
After the issue, the 72% shareholding of cornerstone investor Hellaby Holdings will decrease.
Club Life has already announced plans to offer brokers options to buy shares each year, based on the annual premium income they earned. The first lot of options will be offered on the company’s first birthday next June, with brokers having a year to exercise them.
The option issue will further dilute the stake of Hellaby, an investment firm, with brokers expected to own a substantial chunk of Club Life within five years.
Ballantyne says the company has exceeded monthly sales volume targets every month since July.
"All the products have gone well, but we’ve been pleasantly surprised by the volume of savings business we’ve sold. We thought it would be about 20% of the business but it’s closer to 30%."
She attributed interest in the savings product to a low upfront fee structure and interest in products designed for children and grandchildren.
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