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XL proposes $3.9 billion takeover of Catlin

Posted On: Dec. 17, 2014 12:00 AM CST

XL Group P.L.C. has approached rival insurer and reinsurer Catlin Group Ltd. with a proposed takeover offer of about £2.5 billion ($3.93 billion).

In a statement Wednesday, Bermuda-based Catlin, which manages the largest syndicate at Lloyd's of London, said that under the indicative terms of the possible offer, Dublin-based XL would acquire 100% of Catlin in a cash and stock deal that would value Catlin shares at £6.99 each. At Nov. 25, 2014, Catlin had 362,464,250 shares at issue, according to the company's website.

Dublin-domiciled XL issued a statement confirming that it had approached Catlin with a possible takeover offer.

Mike McGavick, CEO of XL, said in the statement: “We both believe that we will be far better positioned and stronger together. We see this transaction as deeply accelerating the strategies of both companies.”

The combined company would make more efficient use of both companies' networks, he said.

“As Catlin is the leading presence at Lloyd's, the combination would immediately expand many of the lines of business in which XL has recently invested. In the increasingly competitive reinsurance market, the combined company would be a top 10 player, thereby increasing alternative capital opportunities and overall relevance to clients and brokers,” Mr. McGavick said.

In its statement, Catlin said: “There can be no certainty that the discussions will lead to any transaction or any certainty as to the final terms on which any such transaction might proceed. A further announcement will be made in due course.”

Catlin also said it was in advanced negotiations with an unidentified party regarding the sale of its interest in Box Innovation Group Ltd., a personalized auto insurance service that trades as Insure the Box.

“Discussions are currently ongoing between both parties, and the final terms of any possible offer are subject to the completion of mutual due diligence,” Catlin said.

Catlin operates the largest syndicate at Lloyd's of London – syndicate 2003 which has capacity of £1.43 billion.

It also has insurance and reinsurance operations in Asia/Pacific, Bermuda, Canada, Europe and the United States.

The company's founder and CEO, Stephen Catlin, this week was inducted into the International Insurance Society Inc.'s hall of fame.