Mike McGavick, XL Group’s chief executive, has said he believes that XL and Catlin would be stronger as a combined entity. The companies have confirmed they are in negotiations that could result in XL acquiring Catlin.
Such a deal would create a truly global competitor across many lines of business. In reinsurance specifically, it would almost certainly propel the company into the top ten reinsurers globally by gross premiums written, boosting its relevance and power in an increasingly tough market for reinsurers.
The companies confirmed today (Wednesday December 17) that they are engaged in preliminary discussions regarding a potential transaction whereby XL would acquire Catlin and form a combined entity.
“Both XL and Catlin – respected, innovative, global P&C firms - are well positioned on their own. However, we both believe that we will be far better positioned and stronger together. We see this transaction as deeply accelerating the strategies of both companies,” McGavick said.
“Specifically, the combined entity would be a leader in the global specialty and property cat markets and would make greater and more efficient use of both companies’ global networks and infrastructure. As Catlin is the leading presence at Lloyd’s, the combination would immediately expand many of the lines of business in which XL has recently invested.
“In the increasingly competitive reinsurance market, the combined company would be a top 10 player, thereby increasing alternative capital opportunities and overall relevance to clients and brokers. The proposed transaction is expected to result in attractive economics starting in the first year and long-term value for shareholders.
“For these reasons, and crucially, for the deep cultural and strategic alignment we see between XL and Catlin, with both built on disciplined underwriting, we see meaningful opportunity in this transaction.”
The company also stressed that any deal would require approval by the boards of directors of each company and would be subject to various shareholder and regulatory approvals and completion of diligence.
XL, Catlin, Mike McGavick, reinsurance, P&C, property casualty