Lloyd’s of London underwriter Beazley raises £385m

Lloyd’s of London underwriter Beazley raises £385m in efforts to drive growth in cyber and specialty sectors

  • Beazley had hoped to raise c.£385m in proceeds but ended up with £35m less
  • Chief executive Adrian Cox decided to buy over 26,000 shares in his company
  • The FTSE 100 firm has said the money would go towards funding growth plans 

Beazley has successfully raised around £350million from a share placing the insurer hopes will help finance growth in the cyber and specialty industries.

The Lloyd’s of London underwriter issued more than 60 million shares at £5.75 each on Tuesday, representing nearly 10 per cent of its share capital and an 8 per cent discount to its £6.25 closing price yesterday afternoon.

It had wanted to raise about £385million in gross proceeds but ended up £35million short, although the FTSE 250 group still hailed ‘strong support’ from investors. 

Capital raise: Lloyd’s of London underwriter Beazley issued more than 60 million shares at £5.75 each on Tuesday, which represented nearly 10 per cent of its share capital 

Beazley shares were 3.2 per cent lower at 605p just before trading closed on Wednesday, though their value has nonetheless expanded by a third this year. 

Five company bosses took the chance to build up their stakes, with chief executive Adrian Cox buying over 26,000 shares and non-executive directors John Reizenstein and Nicola Hodson acquiring around 6,500 between them.

Beazley has said the money would go towards funding growth plans, particularly in the cyber and specialty sectors, the former of which has higher written premiums and whose rates are in significant demand but short supply.

‘The market dislocation in select insurance classes gives us a strategic opportunity to accelerate our growth trajectory and increase net premium exposure in areas where we believe we can deliver outsized returns,’ Beazley said yesterday. 

In half-year results published last week, the firm revealed the value of cyber risks premiums climbed by two-thirds year-on-year to $838million, a far greater increase than in any other division.

By contrast, specialty risks premiums grew by only 10 per cent, something it blamed on a very competitive directors’ and officers’ liability insurance market.

CEO Adrian Cox said the group had achieved a good underwriting performance during the period and continued to forecast a combined ratio – a calculation of an insurer’s profitability – in the ‘high 80s.’

Any number below 100 denotes an underwriting profit. 

He added: ‘As expected, overall rates have moderated; however, we are seeing increased demand across many lines of business which supports our growth ambitions. 

‘Whilst mark-to-market losses have occurred due to rising yields in our fixed income portfolio, rising yields also mean we anticipate significant future investment returns.’ 

However, the company warned Hurricane Ian, the deadliest tropical cyclone to strike Florida since 1935, would cost an estimated $120million in losses.

Fellow Lloyd’s of London underwriter Hiscox revealed earlier this month that it incurred a $40million hit in the third quarter from the hurricane and was setting aside $135million to cover potential losses from the disaster.

Analysts at broker Peel Hunt have predicted the insurance industry will lose between £35billion and £52billion from Hurricane Ian, which would be its biggest loss since Hurricane Katrina.  

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