Beazley raises $300m capital to boost balance sheet amid COVID-19 uncertainty

Specialist Lloyd's re/insurer Beazley has raised £247 million (approximately $300 million) in fresh capital to boost its balance sheet in light of the uncertainty created by the COVID-19 pandemic.

The capital was raised by placing more than 78.5 million new ordinary shares at a price of 315 pence each.

The company said that it is raising equity to continue to "support ongoing organic growth".

"The Board has considered the optimal capital structure for the Group and believes that it is an appropriate time for the Company to raise equity in order to position the business for future growth opportunities as well as providing further strength to the balance sheet in light of the continued uncertainty from COVID-19," said Beazley in a regulatory filing.

"The net proceeds from the Placing and Subscription, along with an increased banking facility, demonstrate Beazley's continued commitment to maintaining a strong balance sheet that can support the Company's growth ambitions and withstand a range of stress scenarios," the company further explained.

The Lloyd's re/insurer said that its growth in recent times has been supported mainly through debt financing.

Beazley estimated COVID-19 related claims of nearly $170 million in the first quarter of 2020, as well as an investment loss of $55 million. At the time, Beazley had drawn down a $140 million letter of credit from the $225 million banking facility it had in place.

Following that, the company increased its banking facility to $450 million, and withdrew an additional $85 million letter of credit, taking its available credit under the facility to $225 million.

In light of the placing, Beazley said that it has decided not to pay a first interim dividend for the six months ending 30 June 2020.

A number of Beazley directors and members of the senior management team have either participated in the placing or have separately subscribed for new ordinary shares. These include Adrian Cox, Andrew Horton, Andrew Likierman, Catherine Woods, David Roberts, John Reizenstein, Robert Stuchbery, Sally Lake and Christine LaSala.