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UPDATE 3-Beazley to raise 150 mln stg, moving to Ireland
Fri, 13th Feb 2009 11:36
By Lorraine Turner
LONDON, Feb 13 (Reuters) - Lloyd's of London insurer Beazley Group PLC announced plans to raise 150 million pounds ($213 million) to exploit growth opportunities and fund the $35 million acquisition of U.S. underwriting firm First State.
Beazley, the latest Lloyds' insurer to announce a cash call, also said on Friday it would follow other British companies in creating a new parent that will be tax domiciled in Ireland.
It reported a 37 percent fall in 2008 pretax profit to 87.2 million pounds, including a foreign exchange gain of 46.2 million, in what it described as a 'difficult year'. This compares with analysts' average forecast of 51.3 million pounds, according to Reuters Estimates.
Gross written premiums were 12 percent higher at 876 million pounds. The final dividend was set at 4.4 pence.
Beazley shares, which had lost 39 percent of their value in the past 12 months, rose 5 percent in early trading but eased back to be 0.5 percent higher at 109 pence by 1110 GMT.
CASH CALL
The company said the 150 million pounds additional capital, net of expenses, would be raised through a placing and fully underwritten 9-for-19 rights issue at 86 pence, a 21 percent discount to Thursday's close at 108.5 pence.
The rights issue is supported by large shareholders, chief executive Andrew Horton said, adding 100 million pounds would be used for growth, with major opportunities seen in speciality lines such as energy, commercial property and reinsurance.
A general rise in insurance prices is anticipated across in 2009 as underwriters react to multi-billion dollar hurricane losses in 2008 and lower investment returns.
Investor support for the cash call comes despite competition from other insurers calling on shareholders for funds. Lloyd's peer Catlin unveiled a 200 million pound rights issue on Thursday aimed at helping it exploit stronger market conditions in 2009. Chaucer is also raising fresh capital.
Capital remains a key issue in the insurance sector.
'We remain concerned regarding ... the amount of capital backing the business,' said analysts at J.P. Morgan. 'We believe that Beazley investment portfolio of 1.55 billion pounds is still very large,' they said.
DUBLIN YOUR MONEY
Horton said he was targeting a 10 percent reduction in tax bills as well as long-term expansion in the Europe market from the move to Ireland.
An Irish tax base would enable Beazley to stay competitive as many rivals already benefited from tax advantages, Horton said, adding other companies in the sector would likely follow Beazley
to Ireland.
The world's second-biggest advertising group, WPP, drugmaker Shire, and media group UBM all announced plans last year to move their tax domicile to Ireland.
Beazley also said it was buying First State Management Group, a U.S. underwriter specialising in commercial property, from Hartford Financial Services Group for $35.4 million in cash, to boost the group's presence in the U.S. market.
Horton, who replaced co-founder Andrew Beazley as CEO last June, said Beazley was not interested in bidding for non-life insurer Chaucer Holdings.
(Editing by Dan Lalor) ($1 = 0.7029 pound) Keywords: BEAZLEY/
(lorraine.turner@thomsonreuters.com; +44 20 7542 9597; Reuters Messaging: lorraine.turner.thomsonreuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
LONDON, Feb 13 (Reuters) - Lloyd's of London insurer Beazley Group PLC announced plans to raise 150 million pounds ($213 million) to exploit growth opportunities and fund the $35 million acquisition of U.S. underwriting firm First State.
Beazley, the latest Lloyds' insurer to announce a cash call, also said on Friday it would follow other British companies in creating a new parent that will be tax domiciled in Ireland.
It reported a 37 percent fall in 2008 pretax profit to 87.2 million pounds, including a foreign exchange gain of 46.2 million, in what it described as a 'difficult year'. This compares with analysts' average forecast of 51.3 million pounds, according to Reuters Estimates.
Gross written premiums were 12 percent higher at 876 million pounds. The final dividend was set at 4.4 pence.
Beazley shares, which had lost 39 percent of their value in the past 12 months, rose 5 percent in early trading but eased back to be 0.5 percent higher at 109 pence by 1110 GMT.
CASH CALL
The company said the 150 million pounds additional capital, net of expenses, would be raised through a placing and fully underwritten 9-for-19 rights issue at 86 pence, a 21 percent discount to Thursday's close at 108.5 pence.
The rights issue is supported by large shareholders, chief executive Andrew Horton said, adding 100 million pounds would be used for growth, with major opportunities seen in speciality lines such as energy, commercial property and reinsurance.
A general rise in insurance prices is anticipated across in 2009 as underwriters react to multi-billion dollar hurricane losses in 2008 and lower investment returns.
Investor support for the cash call comes despite competition from other insurers calling on shareholders for funds. Lloyd's peer Catlin unveiled a 200 million pound rights issue on Thursday aimed at helping it exploit stronger market conditions in 2009. Chaucer is also raising fresh capital.
Capital remains a key issue in the insurance sector.
'We remain concerned regarding ... the amount of capital backing the business,' said analysts at J.P. Morgan. 'We believe that Beazley investment portfolio of 1.55 billion pounds is still very large,' they said.
DUBLIN YOUR MONEY
Horton said he was targeting a 10 percent reduction in tax bills as well as long-term expansion in the Europe market from the move to Ireland.
An Irish tax base would enable Beazley to stay competitive as many rivals already benefited from tax advantages, Horton said, adding other companies in the sector would likely follow Beazley
The world's second-biggest advertising group, WPP, drugmaker Shire, and media group UBM all announced plans last year to move their tax domicile to Ireland.
Beazley also said it was buying First State Management Group, a U.S. underwriter specialising in commercial property, from Hartford Financial Services Group for $35.4 million in cash, to boost the group's presence in the U.S. market.
Horton, who replaced co-founder Andrew Beazley as CEO last June, said Beazley was not interested in bidding for non-life insurer Chaucer Holdings.
(Editing by Dan Lalor) ($1 = 0.7029 pound) Keywords: BEAZLEY/
(lorraine.turner@thomsonreuters.com; +44 20 7542 9597; Reuters Messaging: lorraine.turner.thomsonreuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
