1st Dec 2005 16:47
BRIT Insurance Holdings PLC01 December 2005 PRESS RELEASEFOR IMMEDIATE RELEASE1 December 2005 Brit Insurance Holdings PLC £150m subordinated debt Brit Insurance Holdings PLC ("Brit" or "the Company"), the UK-basedinternational general insurer and reinsurer, announces that it has conditionallyagreed to raise £150 million of Lower Tier Two long term subordinated debt,through the issue of Subordinated Notes due 2030 ("the Issue"). Brit will usethe proceeds to fund the Group's working capital, to take advantage of growthopportunities in the insurance market, for general corporate purposes, includingre-financing the Company's 8.5% Unsecured Subordinated Loan Stock 2008 (whetheron maturity in 2008 or earlier) and to fund all or some of the Group's currentpension fund deficit which is approximately £20 million as calculated underFRS17. The Issue is callable on 9 December 2020 and bears an initial interest at therate of 6.71% per annum, payable annually in arrear, representing a spread of240 basis points over the benchmark gilt. Following the call date the interestrate resets at 340 basis points above the 10-year gilt rate prevailing at thetime. The Issue is expected to be assigned a rating of BBB by Fitch Ratings,and to be listed on the London Stock Exchange's Gilt Edged and Fixed InterestMarket. Joint Lead Managers to the issue are Barclays Capital and HSBC.Completion of the Issue, which is subject to certain conditions, is expected tooccur on or before 9 December 2005. Matthew Scales, Group Finance Director, said: "The Group has taken advantage offavourable conditions in the bond markets to raise £150 million of additionalLower Tier Two debt. The Issue was substantially oversubscribed and as such weare very pleased with the overwhelming response, which has resulted in a verysuccessful debut for the Group in the Sterling hybrid market. "We now intend to press ahead with our share premium reduction to create furtherdistributable reserves to give maximum flexibility for dividend payments. Weexpect this process to be completed by the end of March 2006. Subject to price,we may now consider buying in some or all of our existing 8.5% UnsecuredSubordinated Loan Stock 2008 before its final maturity. We are extremelycomfortable with this new, high quality long term subordinated debt representingapproximately 25 per cent of net tangible assets." Dane Douetil, Group Chief Executive, said: "We commented at the interims that wewere looking at the Group's capital structure and that we would make anannouncement before the year-end. We have now finished the review and concludedthat an increase in gearing using subordinated debt that qualifies as regulatorycapital is the most efficient and flexible structure. "The £150 million that we have raised will allow us to grow our London Marketand UK operations into the rapidly improving market conditions, whilstincreasing earnings per share and our return on equity." -Ends- Enquiries Dane Douetil/Matthew Scales, Brit Insurance Holdings PLC 020 7984 8500David Haggie/Peter Rigby, Haggie Financial 020 7417 8989 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BRE.L