Global insurance firm XL Group has signed an agreement to acquire Lloyd’s of London insurer Catlin Group, for around $4.1bn.
As part of the deal, XL will acquire Catlin’s common shares for consideration of 388p in cash and 0.130 share of XL for each Catlin common share.
The offer values Catlin at 693p per share, on the basis of the closing price of an XL share of $35.42 on 8 January. Catlin shareholders will also secure a 22p final dividend in Q1 2015.
XL Group CEO Mike McGavick said: "We are delighted to announce this compelling combination which positions us strongly to provide more – and even better – answers for the world’s most complex risks while enhancing our opportunities to create value for shareholders and better serve clients and brokers."
With six underwriting hubs in London, Bermuda, the US, Asia Pacific, Europe, and Canada, Catlin Group is a property and casualty (P&C) insurer and reinsurer.
Since 2000, the company owned and managed Lloyd’s syndicate and runs offices in around 50 cities, as well as provides access to local underwriting expertise with about 2,300 employees in 25 countries.
The combined company is expected to achieve significant scale within its core competencies of global specialty insurance and reinsurance, with $17b of total capital and approximately $10b of net premium, based on 31 December 2013 audited financials of each company.
Catlin Group CEO Stephen Catlin said: "XL is a compelling partner for the Catlin business. Both businesses have been built on underwriting excellence and benefit from strong cultural compatibility."
Upon closing of the transaction, Mike McGavick will continue as CEO and Stephen Catlin is expected to join the combined company as executive deputy chairman.
Subject to approval of Catlin shareholders and sanction by the Supreme Court of Bermuda, customary regulatory approvals and anti-trust clearances, the transaction is expected to be completed in mid-2015.
Image: XL Group to acquire Lloyd’s of London insurer Catlin Group. Photo: courtesy of Stuart Miles/ FreeDigitalPhotos.net.