Australia-based QBE Insurance Group has announced that it will raise about $825m capital to deal with the economic crisis stemming from the coronavirus pandemic.
QBE’s pre-emptive capital raise comes after a strong first quarter for the insurer where it witnessed gross written premiums rise 9% to $4.53bn, reported Reuters.
The company’s capital raise plans include $750m institutional placement and further $75m through a share purchase plan comprises.
QBE CEO Pat Regan noted that the measures are necessary for the extraordinarily difficult landscape.
“The capital plan we have outlined positions us to navigate this period of extreme uncertainty with demonstrable strength and gives us the flexibility to pursue organic growth opportunities that may arise over the medium term,” Regan was quoted as saying by Reuters.
As per the report, the placement to institutional investors will be A$8.25 per share. This is a 9.4% discount to QBE’s last closing price of A$9.11 on April 9.
The company will issue 145.5 million new shares.
The capital raise is expected to boost the insurer’s capital to above Standard & Poor’s ‘AA’ credit-rating level.
Last month, the company closed down its UK offices in order to stress-test its business continuity plan.
Meanwhile, many insurance companies are striving to strengthen their reserves as pandemic continues to create a dire situation across all major industry sectors.