Insurance Australia Group (IAG), the Australian insurer that owns State Insurance and NZI, is mulling a NZ$150 million bond issue for New Zealand investors.
The company told shareholders at its annual meeting it’s considering an issue of unsecured subordinated bonds to the New Zealand public with the option to accept oversubscriptions. The bonds would mature in 25 years, and IAG could call on them after the fifth anniversary of their issue and every interest payment date thereafter, it said.
IAG has been touted as a potential bidder for beleaguered rival AMI Insurance, which has been hard hit by the Christchurch earthquakes. The issue would be part of the insurer’s ongoing capital management programme, with net proceeds used for general corporate purposes and offering it flexibility for future refinancing.
The Australian insurer’s New Zealand businesses posted a second-half loss of A$86 million from claims from the Canterbury earthquakes and rising costs of reinsurance. IAG said it expects the bonds will be rated A- by Standard & Poor’s, and expects to open an offer next month.
ANZ and UBS New Zealand are the lead managers.
Shares in IAG rose 1 percent to A$3.15 on the ASX today, and have shed 19 percent this year.
4 Comments
Please do, they owe me the thick end of $500k and I would prefer it sooner rather than later. All the insurance companies got burned here, and found out (too late) that they should have looked at the land under the houses before pricing the risk of the houses. The information has been in the public domain for decades, but they were either too complacent or too dumb to take note of it. You want to invest in people with this level of competence, don't whine when they ( and maybe you) get burned a second time.
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