The QBE Insurance Group Ltd (ASX: QBE) share price won't be going anywhere today after the insurance giant requested a trading halt.
Why is the QBE share price in a trading halt?
This morning QBE requested a trading halt in order to launch an institutional placement and share purchase plan to raise up to US$825 million. These funds will be raised at A$8.25 per new share, which is a 9.4% discount to its last close price.
The company made the move in response to the COVID-19 pandemic, which it notes has created unprecedented economic and investment market uncertainty.
This equity raising and accompanying actions will lift its regulatory capital from 1.6x PCA currently to around 1.9x. This will increase its capital above S&P 'AA' levels.
Management believes the equity raising is prudent and positions QBE with demonstrable capital strength to navigate a broad range of severe economic scenarios.
Though, it is worth noting that despite this disruption, QBE's premium rate momentum and underlying premium growth accelerated during the first quarter.
First quarter update.
In addition to its placement, the company has provided an update on its performance during the first quarter.
As mentioned above, insurance trading conditions across the company strengthened further during the first quarter despite the disruption caused by the COVID-19 pandemic.
Company-wide premium rate increases averaged 8%, up from 4% in the first quarter of FY 2019. This was driven by a continuation of strong premium rate momentum across all divisions, but especially in North America and International.
Gross written premium increased by more than 9% to US$4,533 million. This was reflective of premium rate increases coupled with solid volume growth assisted by improved retention in every division.
QBE CEO, Pat Regan said: "Despite the extraordinarily difficult landscape, QBE commenced the year with strong pricing momentum and underlying premium growth. The capital plan we have outlined positions us to navigate this period of extreme uncertainty with demonstrable strength and gives us the flexibility to pursue organic growth opportunities that may arise over the medium term."
