Bermuda domiciled reinsurer RenaissanceRe Holdings Ltd. (RenRe) has announced the public offering of 5,500,000 common shares and a concurrent private placement by existing shareholder State Farm, as it looks to raise capital in order to take advantage of current market conditions.
Assuming a public offering price of $164.91 per share, the last reported sale price of RenRe’s common shares on the NYSE on June 1st, the reinsurer expects to raise net proceeds of approximately $957 million from this offering and the private placement.
Furthermore, the underwriters for this transaction will have the option to purchase up to an aggregate of 825,000 additional common shares from RenRe, taking the net proceeds closer to $1.1 billion.
Currently, State Farm owns 4.4% of RenRe’s total common shares outstanding, and has now entered into an investment agreement to purchase an additional $75 million of the firm’s common shares at the public offering price per share.
Interestingly, RenRe recently filed a post-effective amendment to its registration statement with the SEC, taking the total aggregate offering price of securities registered under the Registration Statement to $1.25 billion.
So, while the public offering (inclusive of underwriters exercising the purchase option) and concurrent State Farm placement is expected to raise net proceeds of just under $1.1 billion, it seems the registration statement would allow the reinsurer to go a little higher if they wanted.
“The Company intends to use the net proceeds from this offering for general corporate purposes, which may include expanding existing business lines, entering new business lines, forming new joint ventures, or acquiring books of business from other companies,” says RenRe.
In a securities filing, the reinsurer goes further to say that it believes the mid-year renewals “reflected tightening conditions” amid the ongoing impacts of the COVID-19 pandemic. In light of this, RenRe feels that these market conditions have “created significant opportunities” in the business lines it operates, adding that it’s well placed to deploy capital in this landscape.
