Better to choose your partner now: Catlin
As the industry continues to consolidate, it is better to choose the partner you want to work with now, rather than wait and have the partner chosen for you.
This is according to Stephen Catlin, chief executive officer of Catlin, who explained the rationale behind the XL Catlin deal in its financial results.
“At Catlin, we concluded that our best course would be to recommend XL's offer. In other words, if the industry is consolidating, wouldn't you rather choose the partner with which you want to work rather than have your partner chosen for you at a later date?”
Catlin believes that the combination of XL and Catlin will result in a broader, better balanced and more efficient underwriting organisation, which would be able to compete more effectively in the evolving marketplace.
“I have been asked many times over the past months why would Catlin agree to be acquired by a competitor. It's a good question. Catlin and XL had been discussing the future of both businesses for more than a year, and both companies' managements concurred that fundamental changes were taking place in the insurance industry,” said Catlin.
“These include the increasing concentration among brokers; the need to invest in more expensive and more advanced data and analytics systems; the challenges raised by alternative capital; and increasing costs, particularly regulatory costs.”
He added that XL and Catlin determined separately that a business combination would be advantageous as merger and acquisition activity would likely increase in the insurance industry.
“The acquisition would bring together two highly compatible cultures based on an underwriting-first mentality. I am excited that upon completion I shall be joining the company, which will be known in the marketplace as XL Catlin, as executive deputy chairman.”
“While the future that awaits XL Catlin is indeed exciting, I have to admit that I do feel a degree of sadness as the company which I established in 1984 enters what are likely to be its final months as an independent organisation. I believe that we have built something special at Catlin over the years, and I am especially proud that the Group has succeeded in our joint goals of providing excellent service to clients and brokers along with superior value to our investors.”