Endurance Specialty Holdings Ltd.'s $1.83 billion purchase of Montpelier Re Holdings Ltd. will likely benefit both reinsurers, according to analysts.

The cash-and-stock deal, the latest consolidation move in the Bermuda reinsurance sector, comes nearly a year after Endurance launched its failed attempts to acquire Aspen Insurance Holdings Ltd.

Pembroke, Bermuda-based Endurance was known to be looking for an acquisition after failing to capture Aspen, and as one of the smaller Bermuda-based reinsurers, Montpelier was perhaps more vulnerable to takeover, analysts said.

Montpelier shareholders will get 0.472 Endurance share and $9.89 in cash for each share held, representing $40.24 per share for Pembroke-based Montpelier, a 2.8% premium to the stock's closing on Monday.

“Endurance has been active in seeking acquisitions, so their interest in Montpelier was not a surprise” said Jim Auden, Chicago-based managing director with Fitch Rating Services Inc.

“Given recent market competition, with pricing of catastrophe lines dropping (and) competition from alternative capital providers, Montpelier was a bit more challenged than more diversified reinsurers,” Mr. Auden said.

Access to Lloyd's

Also in the deal, Endurance gets a platform at Lloyd's of London, which eluded it when it failed to buy Aspen.

This is the third recent deal which gave a buyer access to the Lloyd's marketplace.

Fairfax Financial Holdings Ltd. announced last month it would buy Brit P.L.C. for about $1.88 billion, and XL Group P.L.C. acquired Catlin Group Ltd. for $4.22 billion in January.

In a research note, Meyer Shields, managing director with Keefe, Bruyette & Woods Inc. in Baltimore, said “Endurance's access to an established Lloyd's business” was one of the positive aspects of the deal.

Others also saw mutual benefit in the deal.

The deal, “gives Endurance the option to build out its Lloyd's business,” while also giving Montpelier “an exit at a nice multiple to book,” said Amit Kumar, New York-based vice president and senior analyst of insurance at Macquarie Capital (USA) Inc.

The deal consists of $450 million in cash and about 21.5 million Endurance shares, and Montpelier's shareholders will own about 32% of the combined company.

The deal is expected to close in the third quarter of 2015, the companies said.