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Endurance to buy reinsurer Montpelier to add Lloyd's platform


(Reuters) — Property/casualty insurer Endurance Specialty Holdings Ltd. will buy reinsurer Montpelier Re Holdings Ltd. for about $1.83 billion to expand into the Lloyd's of London underwriting business.

The cash-and-stock deal comes nearly a year after Endurance failed in its attempts to acquire Aspen Insurance Holdings Ltd., which has a sizeable Lloyd's business.

Montpelier shareholders will get 0.472 Endurance share and $9.89 in cash for each share held, the companies said on Tuesday.

This represents $40.24 per share for Montpelier, a 5.5% premium to the stock's closing on Monday.

Montpelier's shares rose about 4.5% to $39.84 in premarket trading, while Endurance shares rose slightly to $64.50.

A slump in reinsurance prices due to intense competition is piling pressure on smaller companies to diversify or consolidate, leading to a flurry of deals in the Lloyd's market.

Canadian property/casualty insurer Fairfax Financial Holdings Ltd. said last month that it would buy Brit P.L.C. for about $1.88 billion to become one of the top five underwriters in the market.

XL Group P.L.C. snapped up Lloyd's of London's Catlin Group Ltd. for $4.22 billion in January, and Qatar Insurance Group acquired underwriter Antares Holdings Ltd. last year.

Endurance's acquisition of Montpelier is expected to close in the third quarter of 2015, the companies said.

The deal consists of $450 million in cash and about 21.5 million Endurance shares.

Montpelier's shareholders will own about 32% of the combined company.

Morgan Stanley & Co. L.L.C. and Jefferies L.L.C. were Endurance's financial advisers and Skadden, Arps, Slate, Meagher & Flom L.L.P. its legal adviser.

Credit Suisse Securities L.L.C. was Montpelier's financial adviser and Cravath, Swaine & Moore L.L.P. its legal adviser.