Amlin planning rights issue to raise £43.2m
Osama Bin Laden claimed another financial victim yesterday when Amlin, the Lloyd's of London insurer, asked its shareholders for more money to take the pressure off a balance sheet stretched by the 11 September terrorist attacks in the United States.
Amlin, the third-largest – and largest independent – business in the Lloyd's market, announced a two-for-seven rights issue to raise £43.2m. It said the money would be used to cut borrowings swollen after premiums soared in the wake of the attacks.
Shareholders are being asked to swallow just under 60 million shares at 77p each, a 17.6 per cent discount to Wednesday's closing price of 93.5p. On the news, the shares fell 5p to 88.5p. The issue was underwritten by Hoare Govett, except for about 8 million shares, for which it had received irrevocable undertakings from subscribers.
The group's chairman, Roger Taylor, said the proceeds of the rights issue would be used to reduce gearing, which rose to 90 per cent of equity after the terror attacks. He added that although the company had forecast a £60m loss from its exposure to the attacks, this should be offset by higher insurance premiums after 11 September.
"The directors believe that Amlin is now entering a period which will offer very favourable underwriting conditions compared with recent years," Mr Taylor said. "Insurance rates, which were already hardening before the tragic events of 11 September, have increased significantly in almost all classes since that date and policy terms are being tightened." Amlin has managed capacity of £575m at Lloyd's, specialising in aviation, direct marine, property, casualty and commercial motor.
In October, Amlin agreed a £100m credit facility with a major US shareholder, State Farm Mutual Automobile Insurance, to help increase the capacity of its Syndicate 2001 by 39 per cent to £800m next year.
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