Hiscox's announcement upon possible capital raising options

Hiscox has announced today to the LSE that it has “sufficient capital” to meet its Covid-19 exposures, however, it is “evaluating” possible sources of extra capital such as new equity in order to respond to changing "market dynamics".

"The COVID-19 pandemic has resulted in unprecedented global economic uncertainty. The Hiscox Board believes the Group has sufficient capital to meet expected liabilities arising as a result of exposures to the pandemic.

"Hiscox expects the resultant uncertainty arising from the pandemic and consequent capital contraction to result in rates hardening across US wholesale and reinsurance markets. Whilst Hiscox’s capital, liquidity and funding positions remain robust, Hiscox is evaluating possible sources of capital to respond in an appropriate way to these market dynamics, which could include raising new equity.

"No decision has been made on whether to proceed with a capital raise or with regards to the timing or size of any such capital raise.

"A further announcement will be made if and when appropriate."

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We have seen QBE announce earlier this month that it is looking to raise US$1.3bn and we expect there will be a number of capital raisings either for opportunistic reasons or because capital is considered to be constrained.