Thursday, August 06, 2015
British private healthcare group Bupa has extended an 800 million pound ($1.25 billion) syndicated credit facility by three years to 2020 at least to strengthen its capital buffers, its chief executive said.
European Union Solvency II regulations for insurers come into force in January 2016, and are expected to require firms to set aside more capital in the event of shocks to their business.
Bupa gets around 70 percent of its revenue from health insurance but also operates hospitals, care homes and medical clinics in many of its businesses around the world.
"We need headroom in terms of solvency capital," Stuart Fletcher told Reuters in a telephone interview.
Fletcher said the extension had been negotiated at better terms than the previous facility. It has been extended to 2020 from the previous 2017 maturity date, with an option to extend again, to 2022.
The company issued a 350 million pound seven-year bond last year with a coupon of 3.375 percent, currently trading at a yield of 3.0 percent.
Fletcher said there were no plans for more debt issuance in the next 12 months.
Bupa posted first-half results on Thursday showing underlying pre-tax profit rose 2 percent to 253 million pounds from a year earlier, on a constant exchange rate basis.
But profits dropped in the firm's British and Australian and New Zealand units, key areas of its business.
In Britain, Fletcher said that high inflation in medical costs was affecting profits.
Bupa, set up in 1947 just ahead of the formation of Britain's national health service to provide an alternative health provision, ploughs all its profits back into the business.
The firm has been expanding in emerging markets such as Chile in recent years.
It has made several acquisitions in Poland this year, where it said it was the market leader in private health insurance. It bought Warsaw-based oncology provider Magodent last month for an undisclosed sum.
Fletcher said the group had no plans for major acquisitions this year, but would look at "fill-in" deals, for instance in Australia.
Bupa would come in at around 50-60th position in the FTSE-100 if it were a listed company. It has 2 billion pounds in outstanding debt.
reuters.com
