Bermuda-based Max Capital Group Ltd. announced last night that it entered into an agreement to acquire Imagine Group (UK) Limited ("Imagine Lloyd's"), a Lloyd's insurance operation, from Imagine Insurance Company Limited ("Imagine").

In addition to paying roughly ?11 million ($22 million) in cash, Max Capital said it will replace letters of credit totaling approximately ?90 million ($179 million) that an affiliate of Imagine has provided to fund Imagine Lloyd's syndicate commitments.

Imagine Lloyd's is part of Imagine Group Holdings, a Bermuda-based holding company conducting specialty insurance and reinsurance activities through insurance and reinsurance entities in Barbados, Ireland and Lloyd's.

As part of the agreement, Max said it will acquire some Imagine Lloyd's operations in Denmark and Japan.

Imagine Lloyd's, through Lloyd's Syndicates 1400, 2525 and 2526, underwrites a portfolio of specialty risks including property catastrophe, financial institutions, personal accident, employers' and public liability, and professional indemnity business.

Max Capital writes specialty insurance and reinsurance for corporations, public entities, property-casualty insurance and life-health insurers through operations in Bermuda, Ireland and through Max Specialty in the United States.

The London base of the acquired business will complement Max Capital's current operations in these locations, Max Capital said.

Calling the Lloyd's operation "an ideal fit for Max" in a press statement, Marty Becker, chairman and chief executive officer of Max Capital, said, "We will further diversify our business and achieve access to the important benefits of Lloyd's market participation."

The acquisition is conditioned on the receipt of various approvals including those from the Financial Services Authority and Lloyd's.

Following completion of the transaction, Imagine Lloyd's is expected to be re-branded as "Max Lloyd's Ltd."

Max Capital isn't the only Bermuda company to announce a Lloyd's acquisition this month. Earlier this month, Ironshore said it would enter the Lloyd's market with the proposed purchase of Pembroke Managing Agency and Syndicate 4000 for ?17 million in cash--or about $33.9 million at the latest exchange rate.

Back in the United States, American International Group also announced a Lloyd's deal this month, acquiring Ascot Underwriting Holdings Ltd., the managing agency of AIG's Lloyd's Syndicate 1414.

AIG previously held a 40 percent minority interest in Ascot, and this transaction involved an acceleration of its option to purchase the agency in 2012.

In June, Max Capital announced an acquisition in the United States, with its Richmond, Va.-based specialty operation, Max Specialty Insurance, buying Commercial Guaranty Casualty Insurance for an undisclosed amount.

Max said that deal would primarily support a previously announced entry into inland and ocean marine underwriting and give U.S. customers access to admitted paper.

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