Beazley targets £385m+ capital raise to fund growth in dislocated market

London headquartered specialty insurance and reinsurance firm Beazley has launched a new capital raising effort, aiming to raise £385 million from an Ordinary share issuance, with more set to be raised from an additional retail placing, which will help fund growth in the hardening market environment.

Beazley said it aims to raise this £385 million of additional equity from new and existing shareholders to “support organic growth and provide growth capital to fund attractive underwriting opportunities.”

The company further explained, “The market dislocation in select insurance classes gives us a strategic opportunity to accelerate our growth trajectory and increase net premium exposure in areas where we believe we can deliver outsized returns, namely cyber and specialty business.

“The Board of Directors has considered the optimal capital structure for the Group and believes that it is an appropriate time for the Company to raise equity in order to fuel Beazley’s growth plans while maintaining a strong balance sheet that can withstand a range of stress scenarios.”

With £385 million to be raised from a Ordinary share issuance, Beazley is also tapping a retail funding platform called PrimaryBid to tap into additional demand from retail investors as well, which could expand the fund raising round over that Ordinary share target.

Beazley is targeting growth across its business, it seems, citing successful market opportunities already secured, but an expectation things will get even better with a hardening market in insurance and reinsurance lines anticipated.

“Rate changes for the nine-month period ended 30 September 2022 were particularly encouraging, with an average rate increase of 17% and three divisions achieving double digit increases,” the company said.

Adding that Beazley, “Expects this momentum to continue, particularly within the property classes where a significant dislocation is emerging.”

On reinsurance, Beazley said, “Property (re)insurance classes are experiencing a hardening rating environment with terms and conditions also improving. The Company expects rates to increase by 15% for direct and 50% for reinsurance in 2023 and believes the market dislocation is likely to persist for a number of years.”

Also explained that, “While the Company has previously been cautious on property (re)insurance given the inadequate pricing environment, the hardening market facilitates an increase in capacity and cat exposure. The Company believes this to be a significant opportunity to be a leader in the market in London, helping drive the underwriting of property (re)insurance and providing a springboard for Beazley’s long term US ambitions.”

We reported just last week that Beazley is forecasting “outsized returns” can be generated across insurance and reinsurance right now.

In addition, the firm’s CEO Adrian Cox said that he expects a “structural change” in the reinsurance market at the January 2023 renewals, especially in property risks, an area Beazley is ready to capitalise on by writing more business.

This capital raise will help to fund that expansion and position Beazley to continue its mission to become a market-leader across many specialty re/insurance classes.