XL Group Inks Deal To Acquire Catlin Group For $4.1 Billion

XL Group signed an agreement to acquire Catlin Group for approximately $4.1 billion to expand and strengthen its position in the global specialty and reinsurance markets.

“We are delighted to announce this compelling combination which positions us strongly to provide more – and even better – answers for the world’s most complex risks while enhancing our opportunities to create value for shareholders and better serve clients and brokers, said Mike McGavick, CEO of XL Group.

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McGavick also believe the deal will accelerate the strategy of XL Group and Catlin Group, address the meaningful structural changes in the P&C sector, and add scale in specialty insurance.

Terms of the deal

XL Group agreed to pay 388 pence in cash and 0.13 of its own share for every Catlin stock.

Catlin Group is valued 693 pence per share based on the closing price of XL stock at $35.42 on January 8.  The acquisition price represents a 23.5% premium to the closing price of Catlin’s stock on December 16, the date before both companies confirmed discussion regarding the deal.

As part of the agreement, the shareholders of Catlin Group will also receive a final dividend of 22 pence, which will be paid in the first quarter of 2015.

The combined company will have $17 billion in total capital and approximately $10 billion of net premium based on the December 31, 2013 audited financials of XL Group and Catlin Group.

The transaction is subject to the approval of Catlin shareholders, sanction by the Supreme Court of Bermuda, anti-trust clearances, customary closing conditions and regulatory approvals.

The name of the newly combined company will be called XL Catlin while the name of the parent company will remain XL Group after the completion of the merger. The newly combine XL Catlin will represent the strong reputation of both brands.

Catlin believes XL Group is a compelling partner

Stephen Catlin, the CEO of Catlin Group will join the board of directors of XL Group. According to him, “XL is a compelling partner for the Catlin business. Both businesses have been built on underwriting excellence and benefit from strong cultural compatibility.”

Mr. Catlin believes that the combined company will become a leading global specialty and property catastrophe insurer. It is expected to benefit from increased diversification, significant further economies of scale and strengthened franchises in each of its markets.