QBE Insurance Plans US$825M Capital Raise on COVID-19 Economic Uncertainties
QBE Insurance is planning to raise about US$825 million in capital as a result of the economic and investment market uncertainty created by the coronavirus crisis.
The company will raise approximately $750 million of equity via an institutional placement and another $75 million from a share purchase plan for retail shareholders, which would lift its capital above S&P “AA” levels.
In addition to the capital raise, the company also has de-risked its investment book by exiting all equities as well as emerging market and high-yield debt. It also has purchased additional reinsurance to cede 90% of crop hail exposure.
“Despite the extraordinarily difficult landscape, QBE commenced the year with strong pricing momentum and underlying premium growth,” said QBE CEO Pat Regan. “The capital plan we have outlined positions us to navigate this period of extreme uncertainty with demonstrable strength and gives us the flexibility to purse organic growth opportunities that may arise over the medium term.”
The company noted that premium rate momentum and underlying premium growth accelerated during the first quarter of 2020, despite the COVID-19 related disruptions.
QBE said premium rate increases during Q1 2020 averaged 8%, up from 4% in Q1 2019, which included a continuation of strong premium rate momentum across all divisions, especially in North America and International.
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