Lancashire Holdings has raised around £277 million through a placement of new common shares.
The re/insurer placed 39,568,089 new common shares, priced at 700 pence per share, a discount of 3.6 percent versus the closing share price on June 9, 2020. This represents approximately 19.5 percent of Lancashire’s existing issued common share capital prior to the placing.
The company said it was raising the fresh cash to take advantage of re/insurance opportunities related to the increase in rates in the markets. It will use the proceeds to fund organic growth and take advantage of rate rises across the majority of its business lines, it said.
Lancashire pointed to rate rises of 20-30 percent for June 1 renewals in the Florida property catastrophe portfolio as an opportunity for the company. Its long-term strategy is to deploy more capital into a “hardening” market and to lower the amount of capital it deploys in “softer” markets, where pricing is weaker. It has historically returned capital to investors when it has not been required.
After three years of heavy cat losses, and the impact of the COVID-19 pandemic, conditions are therefore ripe for the re/insurer.
“In the face of these challenges there has been a retrenchment in re/insurance market risk capital and capacity,” the company said. “This in turn has led recently to continued rate increases in many of the group’s core insurance segments and accelerated rating dislocation in the catastrophe exposed reinsurance lines.”