Dublin-based XL Group PLC has approached rival insurance and reinsurance company Catlin Group with a takeover proposal worth $3.39 billion.
If the bid is accepted, XL Group would acquire 100% of Catlin in a cash and stock deal valuing the group’s shares at 6.99 pounds each. Catlin currently has 362,464,250 shares at issue and 1.43 billion pounds of capacity, with operations in the US, Europe, Canada, Bermuda and the Asia-Pacific region.
“We both believe that we will be far better positioned and stronger together,” XL CEO Mike McGavick said in a statement. “We see this transaction as deeply accelerating the strategies of both companies.”
McGavick believes the takeover would benefit both brokers and clients, and make better use of both companies’ networks.
“As Catlin is the leading presence at Lloyd’s, the combination would immediately expand many of the lines of business in which XL has recently invested,” he said. “In the increasingly competitive reinsurance market, the combined company would be a top 10 player, thereby increasing alternative capital opportunities and overall relevance to clients and brokers.”
Catlin confirmed that it is entering talks with XL, but cautioned observers not too read too much into the ongoing negotiations.
“There can be no certainty that the discussions will lead to any transaction or certainty as the final terms on which any such transaction might proceed,” the company said in a released statement. “A further announcement will be made in due course.”
The news comes as London-based insurer is continues in “advanced negotiations” with an undisclosed party over the sale of its interest in Box Innovation Group, an auto insurance service.
“Discussions are currently ongoing between both parties, and the final terms of any possible offer are subject to the completion of mutual due diligence,” Catlin said.
Catlin enters these discussions as CEO Stephen Catlin was this week inducted into the International Insurance Society’s Insurance Hall of Fame.
“Stephen embodies the Insurance Hall of Fame criteria: a strong leader with extraordinary business vision and creativity,” said IIS Honors Committee Chairman Bernhard Fink. “In a relatively short period of time, the small company he founded has grown into the biggest syndicate at Lloyd’s with operations on four continents—a truly remarkable achievement.”
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