Lloyd’s insurer Beazley has said that certain markets, such as property and marine, had now experienced two consecutive years of rising rates and presented “attractive near term opportunities.”
The company has raised £247m ($300m) in an accelerated private placement of stock into the institutional market. The Placing and Subscription of 78,514,505 New Ordinary Shares at 315p a share represented a discount of 4.9% to the closing share price of 331.4 pence on May 18th.
Beazley said that, as a result of elevated claim numbers in recent years, rates had risen steadily across its core markets. Rate changes for the three months ended March 31st were “particularly encouraging”, with an average rate increase of 8%, with three divisions achieving double digit increases.
Beazley has estimated that Covid-19 related claims will amount to $170m. The Company also experienced an investment loss of $55m (1%) in the three months to March 31st 2020 (the investment return to April 30th 2020 swung to a gain of 0.2%). At the time of the Trading Update, the Company had drawn down a $140m letter of credit from the $225m banking facility it had in place.
Since the Trading Update, the Company has agreed an increase in its banking facility from $225m to $450m. The Company has subsequently drawn down a further $85m letter of credit, bringing the total draw down under the letter of credit to $225 million. This leaves $225m of unutilised capacity under the banking facility.
In light of the Placing, Beazley has elected not to pay a first interim dividend for the six months ending June 30th 2020. “However, the Board continues to recognise the importance of capital returns to its shareholders – the Company has a long track record of paying dividends and remains committed to doing so in the future”, the insurer said.