The Bermuda-based Catlin Group announced this morning it has agreed to acquire Wellington Underwriting Plc for an estimated $1.2 billion to create the largest underwriting operation within Lloyd's.
The acquisition will create a property-casualty insurer with gross premiums of about $2.4 billion annually and market capitalization of about $2.5 billion.
"Catlin will become the largest underwriting operation in Lloyd's, a leading player in Bermuda and will have a strong platform to accelerate its development of U.S. business," the Bermuda carrier said in a statement.
A.M. Best said the ratings of Catlin Group Limited will remain under review with negative implications. The agency put the company under review earlier this month over concerns about its consolidated risk exposure.
Best said it will have to review the likely impact on Catlin's consolidated risk-adjusted capitalization of future major events, particularly the impact of stress scenarios.
The agency did say the enhanced diversification that could result from the acquisition could be viewed as a positive factor.
The deal contains the following elements:
o Stephen Catlin will become chief executive officer of the Enlarged Group, and key Wellington executives will be an integral part of the Group's management team.
o Wellington shareholders will receive .17 New Catlin Shares and 66 cents per share, representing a premium of about 31 percent.
o Wellington shareholders will own about 34 percent of the enlarged group.
Mr. Catlin said the acquisition will accelerate the carrier's already announced plans for a U.S. expansion, and "the combination further diversifies our underwriting portfolio, fulfilling our objective of seeking uncorrelated risk."
Wellington's Chief Executive Preben Prebensen said the combination accelerates Wellington's planned entry into the Bermuda market.
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