(Bloomberg) — Validus Holdings Ltd., the Bermuda- based reinsurer, agreed to buy Western World Insurance Group Inc. for $690 million in cash to expand in specialty lines of coverage in the U.S.

Western World, based in Franklin Lakes, New Jersey, will operate as a separate business, Validus said today in a statement.

Validus, led by Chief Executive Officer Ed Noonan, has used deals to expand in businesses such as crop and catastrophe coverage. Western World specializes in excess-and-surplus lines, or coverage that isn't available from insurers licensed by a state.

Western World offers an “excellent U.S. distribution platform, outstanding management and industry-leading technology,” Noonan, 56, said in the statement. The deal “creates a franchise that will provide compelling products and services for our customers.”

The purchase price is 33 percent more than Western World's book value of $518.3 million, according to the statement. The deal is subject to regulatory approval and will probably be completed by the end of the third quarter, Validus said.

Validus has declined 8.5 percent this year, lagging behind the 6.2 percent gain of the Standard & Poor's 500 Index.

Greenhill & Co. is providing Validus with financial advice, and Skadden Arps Slate Meagher & Flom LLP is the legal adviser. Goldman Sachs Group Inc., Sullivan & Cromwell LLP and Morrison Cohen LLP advised Western World.

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