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Hiscox considering capital raise
29th Apr 2020 08:01
(Sharecast News) - Hiscox said on Wednesday that it is "evaluating possible sources of capital" which could include raising new equity, amid expectations that rates in the US wholesale and reinsurance market will rise due to the coronavirus pandemic.
Responding to press speculation, the insurer said no decision has been made on whether to proceed with a capital raise or with regards to the timing or size of any such capital raise.
Hiscox insisted that its capital, liquidity and funding positions remain "robust" and said it has sufficient capital to meet expected liabilities arising as a result of exposures to the pandemic.
At 1005 BST, the shares were down 4.5% at 699.80p.
UBS said: "We view the timing of this news flow as negative given uncertainty on business interruption remains."
RBC Capital Markets said: "The Hiscox statement confirms that there has been no decision made on whether to proceed with an equity raise or other details including timing or size of any issue. However, in order to get comfortable with committing additional funds to any raise, we believe investors should ask the following: 1) What is your binding constraint on capital? 2) How much surplus versus your binding constraint would a raise give you in the scenario that the business interruption claims in retail are ruled against? 3) How much surplus in the scenario that you have to pay these claims?"
Responding to press speculation, the insurer said no decision has been made on whether to proceed with a capital raise or with regards to the timing or size of any such capital raise.
Hiscox insisted that its capital, liquidity and funding positions remain "robust" and said it has sufficient capital to meet expected liabilities arising as a result of exposures to the pandemic.
At 1005 BST, the shares were down 4.5% at 699.80p.
UBS said: "We view the timing of this news flow as negative given uncertainty on business interruption remains."
RBC Capital Markets said: "The Hiscox statement confirms that there has been no decision made on whether to proceed with an equity raise or other details including timing or size of any issue. However, in order to get comfortable with committing additional funds to any raise, we believe investors should ask the following: 1) What is your binding constraint on capital? 2) How much surplus versus your binding constraint would a raise give you in the scenario that the business interruption claims in retail are ruled against? 3) How much surplus in the scenario that you have to pay these claims?"