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Berkshire Hathaway Specialty Insurance
Berkshire Hathaway Specialty Insurance

Ensurance reassures ASX over its financial state

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Insurance underwriting agency Ensurance says it “will be able to continue its operations” in response to an Australian Securities Exchange (ASX) query over its financial state.

The agency’s market update for the March quarter reported a negative net operating cashflow of $936,000 and noted it expects about $2 million in outflows for the current quarter.

Of the $2 million it expects to spend during this quarter, about $1.3 million will go towards staff costs, according to the March update, and the business had about $1.47 million in cash holdings at that time.

“It is possible to conclude, based on the information in the [March update], that if [Ensurance] were to continue to expend cash at the rate indicated by the [update], [the business] may not have sufficient cash to continue funding its operations,” the ASX said in a letter last week to the company.

The ASX letter requests the company to explain its financial condition and state whether the management is seeking to inject more funds into the business.

Ensurance says it expects the operating cash flow to stay negative for the time being because of the various moves underway to grow the business, which includes expanding in the UK.

It says Ensurance is already engaged in talks to secure funding from a number of investors, and is optimistic of a positive outcome. Additionally the company has received confirmation of continued unconditional financial support from a major shareholder.

“The company is confident that it will be able to continue its operations and meet its business objectives,” Ensurance says in its response to the ASX. “The company is currently in advanced discussions with a number of high net worth and strategic investors with a view to raising further capital in the near term.

“To date the company has been successful in raising capital through the issue of both debt and equity instruments and is confident in its ability to raise further capital to support its growth plans into the future.”

Ensurance has in recent months announced a number of new products for the domestic and UK markets.

The company made an $8.7 million loss in the last financial year, which it said was due partly to costs related to its UK expansion.