Lloyd’s of London underwriter Beazley raises £385m

Beazley has successfully raised around £350 million from a share that the insurer hopes will help fund growth in the cyber and specialist industries.

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

It had hoped to raise around £385 million in gross proceeds, but ultimately fell short of £35 million, although the FTSE 250 group still had strong investor support.

Beazley shares were 3.7 percent lower at 602p Wednesday mid-afternoon. Their value has risen by almost a third since the beginning of the year.

Five company bosses took the opportunity to build their holdings, with CEO Adrian Cox buying more than 26,000 shares and non-executive directors John Reizenstein and Nicola Hodson buying about 6,500 combined.

Beazley has said the money would go to fund growth plans, particularly in the cyber and specialty sectors, the former of which has higher premiums written and high demand but short supply.

“The market disruption in selected classes of insurance provides us with a strategic opportunity to accelerate our growth trajectory and increase net premium exposure in areas where we believe we can generate exorbitant returns,” Beazley said yesterday.

In half-year results released last week, the company revealed that the value of cyber risk premiums rose two-thirds year over year to $838 million, a far greater increase than any other division.

In contrast, premiums for specialty risks rose just 10 percent, which the company said was due to a highly competitive directors’ and officers’ liability insurance market.

CEO Adrian Cox said the group delivered good insurance 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 indicates an underwriting profit.

He added: “As expected, overall rates are subdued, but we are seeing increased demand across many industries, supporting our growth ambitions.

While market value losses have occurred due to rising returns in our fixed income portfolio, rising returns also mean that we expect significant future investment returns.

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

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