Hiscox, Plc, one of the U.K.’s leading Lloyd’s and specialty insurers, announced that it’s in the process of forming a Bermuda-based subsidiary, which will “write a balanced business mix of reinsurance and retail business.”
The company plans to raise £170 million ($297 million) through a rights issue to help fund the transaction, which is capitalized at $500 million. Another $225 million will be financed through “bank borrowings and existing Group resources.” The securities are not for sale and no offerings have a or will be made in the United States, Canada, Australia, South Africa, the Republic of Ireland, Japan or other areas where such sales are restricted.
Hiscox noted that the initiative recognizes an “opportunity to capitalise on favourable market conditions with expected participation in the 2006 renewals season.” It plans to field an “experienced management team with Robert Childs to become Chief Executive of Hiscox Bermuda.”
Hiscox said anticipated premiums would be around $325 million in 2006, “of which $235 million will be incremental to the Group. The establishment of Hiscox Bermuda and the Rights Issue will, in the absence of abnormal losses, enhance the Group’s net asset value per share immediately, its earnings per share from 2006 and its return on equity from 2007
Commenting on the proposed Rights Issue, Chairman Robert Hiscox stated: “We have watched the growing market in Bermuda and for some time considered that we need to underwrite there to increase the spread, balance and distribution of both our global reinsurance and retail accounts. Bermuda is a fast growing reinsurance market, which now sees business not shown in London, and has pricing advantages and a favourable regulatory regime.
“The time is right for us to open there. Reinsurance prices will be strong following the spate of hurricanes this year. Robert Childs will lead the Hiscox Bermuda team and will write a disciplined, balanced portfolio of both reinsurance and retail business. This is an exciting opportunity to underwrite our business more internationally, with an experienced team, with a proven track record.”
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