IAG raises A$650m capital as it braces for A$865m COVID-19 hit
Insurance Australia Group (IAG) has raised A$650 million in new equity capital as it seeks to tackle pandemic-related business interruption claims of around A$865 million following the Supreme Court's test case judgement.
The capital raise is in response to the NSW Court of Appeal ruling that determined that insurers could not reject COVID-19 related BI claims under pandemic exclusions that referenced the Quarantine Act.
The insurer entered a trading halt on November 19 to assess the financial impact of the ruling. IAG recognised a A$865 million post-tax hit from potential pandemic-related BI claims.
On November 20, the company announced it will raise A$750 million to strengthen its balance sheet via a fully underwritten institutional placement of A$650 million and a non-underwritten share purchase plan to raise up to A$100 million.
Under the placement, 128.7 million new fully paid ordinary shares will be issued to domestic and offshore institutional investors at a price of $5.05 per share.
IAG said it is "pleased" with the strong support from its shareholders for the equity raising, which it hopes will position the company well to execute on its strategic plan.
