Insurer caught by £ 1.2bn deal
FORMER England cricket team sponsor Brit Insurance is set be bowled over in a £ 1.2billion takeover deal to continue the consolidation of the Lloyd’s insurance market.
Shares in the FTSE 250 company jumped 11 per cent or 30 ¾ p to 305p following a recommended 305p- a- share cash offer from Canadian insurer Fairfax Financial Holdings.
It’s hot on the heels of New York- listed insurer XL’s £ 2.8billion acquisition of Catlin, the biggest- ever takeover of a Lloyd’s of London underwriter.
Brit was valued at £ 960million when it was taken public last year by its private equity owners Apollo Global and CVC Capital Partners, which own nearly three quarters of the company between them.
They acquired the business in 2010.
Brit acknowledged while it had made “meaningful strategic and fi nancial progress” as a standalone fi rm, if faced a challenging climate of low interest rates and a softening of premium rates due to increased competition and surplus underwriting capacity.
It said: “This trend is expected to continue and lead to declining fi nancial returns and more muted future growth prospects across the industry.” It also argued staff, brokers and clients would benefi t from Fairfax’s global scale and its resources that support development.
Chairman Richard Ward, left, said: “The combination will bring us closer to realising our strategy of building the leading global speciality ( re) insurer.
“Our businesses are complementary. The deal provides an opportunity to deliver respective growth ambitions.”
Fairfax boss Prem Watsa said: “Brit has an outstanding record over the past 10 years and will continue to operate on a decentralised basis.
“With the acquisition, Fairfax will have a top- fi ve position at Lloyd’s of London.”
Analysts said the takeover spotlight would now be focused on the dwindling band of listed Lloyd’s insurers, including Beazley, Lancashire and Novae.
Shore Capital’s Eammon Flanagan said: “And so the merger and acquisition juggernaut amidst the Lloyd’s quoted insurers continues.
“All eyes will now focus on the next potential candidate.”