Ecclesiastical in £40.8m share issue

Ecclesiastical Insurance Office, a division of the Ecclesiastical Insurance Group, is planning to issue 40m new preference shares with a £1 face value at a price of £1.02 a share, raising £40.8m of additional capital.

The new shares, which are non-cumulative irredeemable preference (NCIP)shares, will be issued and admitted for trading on the London Stock Exchange on 16 December.

The company said in the offer prospectus that under the current regulatory regime, it believes it could sustain good growth in its existing business with existing capital and through internal capital generation. However, it added that the regulatory environment is uncertain and that the board believes regulators will raise minimum capital requirements under the forthcoming Solvency II capital regime.

Solvency II is expected to come into force in January 2013.

Eccesiastical said that the placing of shares is intended to strengthen the company’s capital position and ensure a continuing buffer against any increase in minimum regulatory capital requirements once Solvency II is implemented. Ecclesiastical believes the capital boost is likely to enable the firm to sustain good growth as it provides additional resources and could allow the company to take advantage of any improvement in insurance market conditions.

The insurer added that in recent years, it has acquired a number of brokers to diversify its earnings stream, and the proceeds of the placing will allow it to look for additional opportunities to diversify earnings.