Validus chairman and CEO, Ed Noonan has announced that the company has signed a letter of intent to acquire Bermuda reinsurer, Longhorn Re, a writer of US-based single-crop reinsurance.
The transaction, which is small in terms of Validus’s past acquisitions, is thought to be good long-term fit. According to Noonan, Longhorn Re’s book offers uncorrelated risk, requires relatively little capital and possesses a good return profile.
Noonan said that agriculture will be a growth area for growth in the foreseeable future. According to Noonan, the strength of the US agricultural market makes the acquisition: “a good foundational play as we [Validus] add to our crop team and look to grow the business, both in the US and internationally.”
Despite the company’s M&A pedigree, Noonan insists that Validus does not see itself as “an acquisition company”. He said: “where there’s a good fit for our business and we could acquire a company at a very reasonable price, we’re more than happy to look at it… [but] Longhorn Re is an exception. It's really the acquisition of a company that wrote a single reinsurance contract, so it really doesn't look like a real acquisition in terms of all the complexity usually associated with it. [Validus will probably be] quiet for a little while, and we continue to not to think of ourselves as an acquisition company.”
Validus, Longhorn Re, acquisition