Max Re Capital, a Bermuda-based re-insurer, has upped its bank lines by $150 million to $450 million to take advantage of the attractive bank market and put in place a revolver/letter of credit facility.
The facility comprises a five-year, $350 million secured letter of credit and a three-year, $100 million unsecured revolver/letter of credit facility. Keith Hynes, Max Re Capital's executive v.p. and cfo, described the $100 million portion as a "belt and suspenders facility." He said the company has no immediate need for it, but keeps cash on the balance sheet in case of an unforeseen event.
Banc of America Securities leads the facility with Citigroup, ING Bank, The Bank of New York, Barclays Bank, HSBC Bank, Wachovia Bank and Webster Bank in the syndicate.
The company has had a B of A led-facility in place since its inception in 2000, varying its borrowing capacity based on its interim cash needs. "B of A has led our credit facility for five years and it is a long-term relationship. They continue to do a good job," Hynes said. He said the company has done a variety of business with the other banks including cash management, asset management and custody.
Last year the company took out $300 million, but increased it this year because the "bank market was attractive and given pricing in the market, having the flexibility of the revolver, which we don't intend to use, was still a reasonable thing to do," he said.
The company also has a $50 million letter of credit facility with HypoVereinsBank and a $20 million letter of credit facility with ING, which the company just shrunk from $50 million in anticipation of the increase in the B of A facility. Both loans are for use in the company's European business. 60% of its revenues are focused in North America with the other 40% coming from Europe.
The company has continued to grow, according to Hynes, and its facility supports that. "We're planning steady growth," he said. "We started in 2000 and Max Re has been growing nicely and developing and this facility is indicative of it. Last year we had $300 million and this year we upped it to $350 million, which is indicative of the growth of the company."