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Catlin Group offers $1.01 billion for Wellington Underwriting

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LONDON—Hamilton, Bermuda-based Catlin Group Ltd. is set to become one of the largest players at Lloyd's of London, following its £532 million ($1.01 billion), offer to acquire Wellington Underwriting P.L.C.

The deal is one of several recent acquisitions in the Lloyd's market, including the announcement late last week that Cathedral Capital P.L.C. will be acquired by investors for about £113 million ($214.6 million).

If Catlin's acquisition of Wellington goes ahead, Catlin will be one of the largest managing agencies at Lloyd's of London. The combined company would be responsible for about £1.2 billion ($2.28 billion) of Lloyd's capital in 2006. Currently, Amlin P.L.C. tops the ranking of largest insurers in the market, with £1 billion ($1.90 billion).

The combined group is expected to have gross premiums of £2.4 billion ($4.56 billion) and capacity at Lloyd's of up to £1.25 billion ($2.37 billion) in 2007.

As part of the acquisition, Catlin will close down Wellington's syndicate 2020, with effect from the end of 2006. The corporate capital provided by Wellington to support 2020 next year will be transferred to Catlin's syndicate 2003.

According to a spokesperson for Catlin, the deal would be good for policyholders as it will create a financially stronger and more diverse player in the insurance market. "The deal means that we will be a stronger company with a more diverse product mix. The combination will allow us to give additional solutions to our client's problems and offer additional products," he said.

The spokesman also confirmed that Catlin is working to complete the merger by Dec. 31.

Meanwhile, Cathedral's independent directors have recommended that shareholders in the company accept an offer from Disciple Holdco Ltd., a newly incorporated company funded by the Alchemy Investment Plan, which values Cathedral at £113 million ($214.6 million).

Shareholders representing 71% of Cathedral Capital shares have already accepted the Alchemy offer, according to a statement released by Cathedral.

The company owns a Lloyd's managing agent and underwrites in the Lloyd's market through syndicate 2010.

In addition to the Catlin and Cathedral deals, earlier last month, Lloyd's insurer Canopius Group Ltd. announced that it would acquire the operations of Creechurch Underwriting Ltd.

Creechurch manages Lloyd's syndicates 1607 and 3786 for the 2006 year at Lloyd's, with combined premium capacity of £90 million ($170.9 million).