Well, that was quick.
It was only on Tuesday when QBE unveiled its comprehensive capital plan, part of which was a fully underwritten institutional placement. The following day, it was announced that the Sydney-headquartered global insurer had successfully completed the placement which apparently generated significant interest from domestic and offshore institutional investors.
The placement, the settlement of which is expected to occur on April 17, involved approximately 145.5 million new fully paid ordinary shares with a price of AU$8.25 per new share. It was exclusively placed to existing shareholders on a pro rata basis.
“We are delighted with the strong support for the equity raising from our institutional shareholders,” commented QBE chief executive Pat Regan. “We see the success of the equity raising as a clear endorsement of our capital plan to bolster the group’s capital, reduce gearing, and improve earnings resilience.”
Meanwhile rating agency S&P Global Ratings described the multiline provider’s capital and broader risk management initiatives as supportive of its overall credit quality at current rating levels.
“Like many of its peers, recent market volatility has hit QBE Insurance Group Ltd.’s investment portfolio and weighed on current year earnings, largely through unrealised losses,” noted S&P Global Ratings in a bulletin on Wednesday. “Our rating on QBE recognises its very strong capital buffers, based on our capital model and regulatory measures.
“The insurer’s plan to raise at least US$750 million in new shareholder capital, issue Additional Tier 1 hybrid capital, and implement a range of reinsurance covers will bolster its overall financial resilience, in our view.”
S&P Global Ratings added that together the measures should provide scope for QBE to benefit from bond spread contractions as markets normalise and take advantage of organic business growth when broader operating conditions improve.
