The Beazley Group, a holding company engaged in the insurance and reinsurance business, has announced the acquisition of the entire existing share capital of personal accident and life underwriting management agency, Momentum Underwriting Management.
The total consideration payable in relation to the transaction is up to $37.5 million, representing GBP20.6 million at current exchange rates, subject to a pound-for-pound adjustment to the extent that net assets at completion differ from GBP2.4 million.
Beazley has said that the transaction, which is not expected to have a material earnings or net asset impact in the near-term, is consistent with its strategy to continue to diversify its portfolio of specialist business into niche international markets which benefit from high barriers to entry.
While Momentum Underwriting Management (MUM) will continue as an agency, Beazley’s share of the business will be underwritten by two new Lloyd’s syndicates. In addition, Beazley will be supporting MUM in their plans to establish local operations in the US, further expanding Beazley’s presence and underwriting reach in the US.
The consideration, which will be satisfied through Beazley’s own internal cash
resources, comprises an upfront cash payment of $15 million payable upon completion, subject to the net asset adjustment, and further deferred payments of up to $22.5 million payable in installments between 2012 and 2014.
The amount of the deferred consideration is subject to the profitability of the business during the 2009, 2010 and 2011 years of account. The transaction is subject to the approval of Lloyd’s and the UK’s Financial Services Authority.
Andrew Horton, CEO of the Beazley Group, said: This acquisition reflects our ambition to continue to develop our specialist expertise in sophisticated underwriting markets and represents a strong strategic fit. It provides an excellent opportunity for Beazley to access new business that complements our existing portfolio.