Fidelis launches IPO
The offering consists of 5.71 million common shares offered by the company and nearly 11.29 million common shares to be sold by some of the company’s existing shareholders
Bermuda-based carrier looks to take advantage of hard market opportunities with offering of 17 million common shares
Bermuda-based re/insurer Fidelis Insurance has unveiled the launch of an initial public offering (IPO) “to take advantage of the ongoing rate hardening” in the market.
The IPO of 17 million common shares is expected to price at between $16 and $19 a share and could raise as much as $371m.
The offering consists of 5.71 million common shares offered by the company and nearly 11.29 million common shares to be sold by some of the company’s existing shareholders.
In addition, the offering’s underwriters will have a 30-day option to buy an additional 2.55 million common shares from the selling shareholders.
At the bottom end of the pricing range, the offering would raise $272m from the sale of the 17 million shares, rising to nearly $313m if the purchase option is exercised.
If pricing is at the top end of the range, the IPO would raise $323m from the initial share sale, rising to more than $371m if the additional shares are acquired.
But net proceeds for Fidelis will be much lower as the company will not receive any of the proceeds from the sale of its common shares by the selling shareholders.
Fidelis intends to use the net proceeds it receives from the offering to make capital contributions to its insurance operating subsidiaries in Bermuda, Ireland and the UK.
These funds, together with other sources of liquidity, should enable Fidelis “to take advantage of the ongoing rate hardening in the key markets in which it participates by writing more business under its planned strategy”, the carrier said.
Fidelis’s IPO comes as other re/insurers have taken steps to raise new capital in the hard market.
Last month, Everest Re Group secured close to $1.5bn of growth capital in a share issuance to fuel growth at the mid-year and future renewals.
Later that month, RenaissanceRe announced a $2.9bn deal to acquire Validus Re from AIG. The transaction will provide RenRe with $2.1bn of additional capital to grow its rated reinsurance platform as well as the potential for a sizeable additional investment from AIG in its third-party capital vehicles.
Hamilton Insurance Group is also reported to be considering an IPO.
Until recently, there has been little new capital entering the market to offset the significant capital outflows, which has added to the upward pressure on pricing.
The IPO follows the restructure of Fidelis’s operations with the launch of a new managing general underwriter, Fidelis MGU, separate from its existing balance sheet insurance units.
Fidelis plans for Fidelis MGU to become one of the largest MGUs in the market, eventually originating and underwriting more than $3bn of gross written premiums across a range of specialty re/insurance classes. The new operation will provide a range of services to Fidelis’s existing insurers.
