RenRe prices SPO for $1.2bn to $1.4bn gross to launch Validus Re funding

Reinsurance group  RenaissanceRe should haul in a gross take of $1.21 billion from a new share issue designed to help fund a major acquisition, plus any lingering sums should underwriters exercise their options for an additional 15%.

RenaissanceRe went to market with 6.3 million new shares, neighbourhood 15% of existing capital, in an SPO that ultimately priced at $192 per share, a light 2% discount to the $196.40 at which shares closed on the New York Stock Exchange. Underwriters have the standard option to buy up an added 15% which, if sold at full price, would increase the gross take to nearly $1.4 billion.

The funding move follows news that RenaissanceRe will pay AIG $2.74 billion in cash and $250 million in new equity for AIG’s reinsurance operations, chiefly Validus Re, exclusive of 95% of reserve development, plus the ILS manager AlphaCat and renewal rights to the treaty reinsurance book at Talbots.

Unspecified new debt will also be part of the funding mix for the deal. At March 31, RenaissanceRe had just over $1 billion of cash on hand.

Management has said that the need to prep the $2.74 billion in year-end cash outlays won’t crimp its growth plans in 2023 into the hard market. CEO Kevin O’Donnell (pictured) told investors he sees excess capital today above and beyond what the deal consumes, and Renaissance Re continues to deploy in a business-as-usual fashion.

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