Preference share proceeds to help fund growth in charities and heritage books

Specialist insurer Ecclesiastical Insurance Office is to use the proceeds from its recent issue of preference shares to fund growth, particularly in its charities and heritage business in the UK, according to chief financial officer Mark Hews.

“Both of those areas are a good fit to our core business and we have had a lot of success in them,” Hews said, adding that the charities business had grown by roughly 25% so far this year and heritage business by about 40%.

Ecclesiastical issued 40m new preference shares priced at £1.02 a share yesterday, raising £40.8m. The new issuance brings the total number of Ecclesiastical preference shares in the market to 106m. “It takes it up to a more liquid, marketable issue size,” Hews said.

The growth plans follow a period of contraction, which has seen Ecclesiastical transfer the bulk of its life book to Engage Mutual Assurance and place its London market underwriting business into run-off.

The company will also continue to look at acquisition opportunities. In April 2008 Ecclesiastical bought South Essex Insurance Brokers and a year later purchased a 40% stake in specialist broker Lycetts. “There may be opportunities going forward to continue that element of the group, but nothing that I can say at this stage,” said Hews.

A further element to the capital raising was to help maintain Ecclesiastical’s capital base, which Hews said currently stands at more than three times its regulatory requirements, and to provide a capital buffer in preparation with Solvency II.

“Given our strong position at the moment there was no pressing need to raise capital for Solvency II purposes but we are aware we have anew regulatory environment down the track,” said Hews. “We are also aware that we have got all these opportunities that we wish to pursue so we are just taking the opportunity when interest rates are low to raise capital in this way.”