XL Catlin merger synergies higher than first estimated

XL Group P.L.C. now expects the synergy savings from its acquisition of Catlin Group Ltd. to reach about $500 million by the end of next year.

The insurer initially estimated synergy savings of about $200 million when it announced its acquisition of Catlin. But by early this year, the estimate reached $300 million and in a filing with the U.S. Securities and Exchange Commission earlier this week, XL said the synergy savings could reach $500 million.

In the filing, XL said that its 2016 integration costs would be about $210 million to $220 million for all of 2016.

“XL also estimates, on a preliminary basis, that full-year 2017 Catlin related integration costs will be approximately $60-$70 million,” according to the filing. After fiscal year 2017, XL expects that the incurrence of Catlin-related integration costs will be substantially complete.”

XL also estimated that for all of 2016, operating expenses that exclude the Catlin-related integration costs would be $1.85 billion to $1.91 billion, and a preliminary estimate of full year 2017 operating expenses, also excluding the Catlin-related integration costs, would be $1.77 billion to $1.84 billion.

“This results in synergies of approximately $500 million by year-end 2017 when compared to the preclosing combined base line planned operating expenses of each of Catlin and XL in 2015 of approximately $2.3 billion” that the company disclosed in May 2015.