Florida based primary insurer FedNat has announced that it is commencing a proposed underwritten public offering of its shares of common stock.
The company says that it will be offering 6,500,000 shares of its common stock.
Based on a closing pricing of $6.77 per share on March 4th, 2021, this suggests FedNat could raise around $44 million from the offering.
However, FedNat will also grant the underwriter a 30-day option to purchase additional shares of common stock in an amount of up to 15% of the number of shares sold in the offering.
If the underwriter exercises its overallotment option in full, this means that 7,475,000 shares could be offered for a total possible value of around $50 million, based on yesterday’s closing price.
FedNat stipulated that the offering is subject to market and other conditions, and did not offer any indication as to when the offering may be completed, or what the size and terms of it may be.
Piper Sandler & Co. is acting as sole bookrunner for the proposed offering.
Earlier this week, FedNat reported a net loss of $73.0 million for 2020 due to elevated catastrophe losses, high reinsurance costs and the adverse claims environment in Florida.
And the company also expects to incur claims in excess of its aggregate reinsurance retention for Winter Storm Uri in February, which is approximately $23 million for this event.
Combined with a co-participation within its reinsurance tower of $18 million in excess of $61 million, FedNat estimates its total exposure to Uri at $41 million, pre-tax.