Wellington Underwriting announced proposals today to raise £74.4m in a placing and open offer at 50p per share.
The Lloyd's insurer proposes a firm placing of 74,360,501 new Wellington shares and an open offer of 74,360,501 new Wellington shares on the basis of five open offer shares for every nine existing Wellington shares.
It said the proceeds will enable it to finance £47m of its investment in Exali Reinsurance Holdings Ltd, the holding company of Wellington Reinsurance Ltd, as well as strengthen its financial base to support its participation in Syndicate 2020 for the 2003 year of account and beyond.
Swiss Reinsurance Company, which has a stake of approximately 9.5% in Wellington, said it has irrevocably undertaken to take up 7,066,849 firm placing shares and its full entitlement to open offer shares.
The placing and open offer have been underwritten by Hoare Govett.
Wellington chief executive Julian Avery said that from 2003, the company's Syndicate 2020 and Wellington Re will offer each other quota share reinsurances over up to 20% of their respective underwriting portfolios.
This will diversify the underwriting portfolios of both businesses and will ensure that Wellington and Unaligned Names have a continuing exposure to the lines of business written by Wellington Re.
Wellington will also provide administration and support services to Wellington Re under a long-term service agreement which will enable Wellington to share costs with Wellington Re.
The directors announced at the time of the final results that Wellington would not pay a final dividend in respect of the 2001 financial year.
It will also not pay any dividends in respect of 2002, but expects to resume paying dividends in 2003.
