Scottish Amicable to raise pounds 100m: Innovative bond issue will fund war chest
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.SCOTTISH AMICABLE, the mutual life insurer, is raising a pounds 100m war chest for acquisitions and expansion through a bond issue.
Scottish Amicable is the first to take advantage of a Department of Trade and Industry concession to allow mutual life offices to raise additional capital by issuing debt. Mutuals have traditionally had to fund their growth out of policyholders' money and have found it difficult to raise new funds.
Roy Nicolson, ScotAm's managing director, said the move was not driven by solvency concerns: 'We are quite happy with the free asset ratio we've got.' ScotAm had free assets of pounds 764m at the end of last year, or 12 per cent of total liabilities. The bond proceeds would have strengthened the ratio to about 13.5 per cent.
Mr Nicolson said the money was not earmarked for anything in particular but ScotAm was considering several ventures in the UK and Europe. It could be used to fund takeovers of small, moribund life offices by the 'vulture' operation being set up by Sir Mark Weinberg.
ScotAm is a partner with St James's Place Capital, jointly chaired by Sir Mark and Lord Rothschild, in J Rothschild Assurance, the two-year-old life insurer run by Mike Wilson.
Mr Nicolson said the pounds 100m of undated subordinated debt was 'pseudo-equity'. The issue, handled by Kleinwort Benson, was priced at 98.09 per cent of the face value of the bonds, and will yield just over 8.5 per cent.
ScotAm will not receive the proceeds until early next month, after policyholders have given their support to the bond issue.
Earlier this year, Scottish Equitable, a fast-expanding mutual office, raised pounds 240m through a deal that will give Aegon, the Dutch insurance group, an initial 40 per cent stake in its unit-linked business.
Scottish Amicable, based in Glasgow, believes it is the sixth largest mutual life office in the UK. Last year it had premium income of pounds 1.08bn.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments