City law firm Eversheds has highlighted the general need for the insurance sector to raise capital.
The firm points to several insurance companies who have already done so including Swiss Re and Munich Re, who have raised funds (through debt rather than equity) having suffered reported estimated losses of $1.2bn and $1.8bn respectively.
Eversheds has also recently advised Lloyd's market operator Advent Capital on its recent £45m private placing for debt and equity which followed the £65m of debt and equity raised at the time of its IPO in mid-2005.
Hugh Bohling, corporate insurance partner at Eversheds, said: “Trading conditions for underwriters are much improved this year, following the 2005 hurricane season and other claims. This means opportunity for insurance players provided they shore up their capital base.
“Advent, for example, is raising money to increase its participation in the syndicate so that it can take advantage of strengthening rates and other terms this year, having provided for its estimated hurricane losses.
“After a difficult year for catastrophe underwriters, things are definitely looking up and we expect to see further fundraising in the market in 2006. As many insurers seek to recoup their losses there is considerable scope for changes in market position, favouring those with the strongest balance sheets and capital and market support.”
