Proceeds wil increase syndicate capacity and cover solvency deficits
Chaucer said today that it will raise £75m from the issue of new shares.
The Lloyd’s insurer said £69m of the proceeds of the share placing would be deposited as Funds at Lloyd's to cover net solvency deficits, meet increased capital requirements arising from the movement of sterling against the US dollar and support new business growth
The remainder would enable Chaucer to increase the capacity of syndicate 1084 to £545 million for the 2009 year of account, an increase of £100 million or 22% on the 2008 capacity of £445 million.
Chaucer said the placing had been driven by the positive market outlook following market events in 2008, including the US windstorms and the broader global financial crisis, which have impacted the group as well as the wider insurance industry
The insurer added that it add had taken significant steps to de-risk its investment portfolio by reducing its exposure to equities and hedge funds. Further de-risking of current investment portfolio was intended during 2009.
“Given the outlook for underwriting conditions, combined with the rebalancing of Chaucer's investment portfolio, the board is optimistic about the future prospects of the group,” the company said in a statement to the Stock Exchange.
Ewen Gilmour, Chief Executive of Chaucer said: "Market conditions improved at the important January renewals and many of our core classes of business are benefiting from significant rate increases.
“We believe that the proposed capital raising is necessary if we are to maintain our current underwriting strategy and thereby take advantage of the improving market conditions, which we believe is in the best interests of our shareholders."