Recently, RenaissanceRe Holdings Ltd. (RNR) announced a public offer to sell 11 million 5.375% Series E preference shares of $275 million or $25 per share, having liquidity preference. The offer is underwritten and is expected to be completed on May 28, 2013, subject to customary closing conditions.
Moreover, in case of over-allotment, the underwriters have the option of buying another 1.65 million preference shares of Renaissance within 30 days. This amounts to aggregate liquidation preference of $41.25 per share.
RenaissanceRe will pay a non-cumulative dividend of 5.375% of the liquidation preference per annum on the preference shares. Moreover, the dividend will be paid only if the board of directors approves it.
RenaissanceRe plans to enlist the new shares on the New York Stock Exchange under the ticker “RNRPRE.” The company holds the right to redeem all or a part of the new preference shares for $25 per share any time after Jun 1, 2018.
RenaissanceRe will use the proceeds from the issue to redeem the outstanding 6.6% Series D preference shares. The remaining proceeds will be used to redeem all or a part of the outstanding 6.08% Series C preference shares. The company had 6 million Series D preference shares and 10 million Series C preference shares outstanding as of Mar 31, 2013.
RenaissanceRe currently caries a Zacks Rank #3 (Hold). Other property and casualty insurers worth considering are Montpelier Re Holdings Ltd. (MRH), ProAssurance Corp. (PRA) and AXIS Capital Holdings Ltd. (AXS). All these companies carry a Zacks Rank #1 (Strong Buy).
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