Markel Expands into Reinsurance with $3B Alterra Buy

(Reuters) - Specialty insurer Markel Corp said it will buy Alterra Capital HoldingsLtd for about $3 billion in cash and stock to diversify into reinsurance.

The offer of $31 per share represents a premium of 34 percent to Alterra's closing stock price of $23.15 on Tuesday. Shares of Alterra opened slightly below the offer price, while Markel's shares fell 5 percent to $462.

Each Alterra common share will be converted into a right to receive 0.04315 Markel common shares plus a cash payment of $10.

"The addition of Alterra's reinsurance and large account insurance portfolios will serve to diversify and strengthen Markel's current book of specialty insurance business," Markel Vice Chairman Steven Markel said in a statement.

Markel's shareholders will own about 69 percent of the combined company, with Alterra's shareholders owning the rest.

Stifel Nicolaus analyst Meyer Shields was lukewarm on the deal.

"We have enormous respect for Markel's underwriting and investing expertise, but we think its M&A track record is frankly less impressive," Shields wrote in a note to clients.

"Its last major acquisition (Terra Nova, in 2000) experienced regular and significant adverse development for years following the deal."

Markel has been venturing into sectors other than specialty insurance in recent years, mirroring Warren Buffett's Berkshire Hathaway.

The insurer created Markel Ventures in 2005 to acquire an assortment of companies including a baking equipment maker and supplier of dredges.

Citigroup was the financial adviser to Markel, while BofA Merrill Lynch advised Alterra.

Comments

Resource Center

View All »

Complimentary Case Study: Helping achieve your financial goals By:...

Find out how a Special Investigation Union used TLOxp to save the company money and...

Do Your Clients Hold The Right CDL License?

Learn about the various classes of CDL Licenses and the industries that are impacted by...

Integrated Content & Communications: A Key Business Issue For Insurers

Insurers are renewing their focus on top line growth, and many are learning that growth...

High Risk Insurance Coverage in the E&S Market

Experts discuss market conditions, trends and projected growth in a rapidly changing niche.

Top E-Signature Security Requirements

This white paper covers the most important security features to look for when evaluating e-signatures...

EPLI Programs Crafted Just For Your Clients

Bring us your restaurant clients, associations and other groups and we’ll help you win more...

Is It Time To Step Up And Own An Agency?

Download this eBook for insight on how to determine if owning an agency is right...

Claims - The Good The Bad And The Ugly

Fraudulent claims cost the industry and the public thousands of dollars in losses. This article...

Leveraging BI for Improved Claims Performance and Results

If claims organizations do not avail themselves of the latest business intelligence (BI) tools, they...

Top 10 Legal Requirements for E-Signatures in Insurance

Want to make sure you’ve covered all your bases when adopting e-signatures? Learn how to...

Looking for Markets?

Search Kirschner’s Insurance Directory to help service your hard to place risks.

497 Risk Categories | 70,000 P&C Insurance Markets

kirschners
Specialty Markets Insight eNewsletter

Receive updates and analyses on hard to place and challenging coverages. Sign Up Now!

Advertisement. Closing in 15 seconds.