XL Group plc said it will offer to acquire all of the capital stock of Catlin Group Limited to form a combined business which is expected to have a leading presence in the global specialty insurance and reinsurance markets.
Under the terms of the transaction, XL will acquire all of Catlin’s common shares and based on the share prices during the time of the transaction, this represents a transaction equity value of approximately US$4.1 billion.
The transaction is structured as a scheme of arrangement and is expected to close mid-2015, subject to approval of Catlin shareholders and sanction by the Supreme Court of Bermuda, customary regulatory approvals and anti-trust clearances, and other customary closing conditions. Following the completion of the transaction, the name of the parent company of the combined group will remain XL Group plc, and the newly combined company will be marketed as XL Catlin, reflecting the strong reputation of both brands.
Business combination, leadership and integration
With $17 billion of total capital and approximately $10 billion of net premium, based on the 31 December 2013 audited financials of each company, the combined company will achieve significant scale within its core competencies of global specialty insurance and reinsurance.
Current XL CEO Mike McGavick will continue as CEO and it is expected that Catlin CEO Stephen Catlin will join the combined company as Executive Deputy Chairman upon the closing of the transaction. It is also expected that Mr Catlin will serve on the Board of Directors.
Mr Peter Porrino will continue as Chief Financial Officer while Mr Greg Hendrick, currently XL’s Chief Executive Insurance Operations, will have the role of Chief Executive of Reinsurance, assuming responsibility for the combined reinsurance business and leading all alternative capital strategies. Until the transaction closes, Mr John Welch, currently Chief Executive of XL’s North America Reinsurance operations, will lead reinsurance operations at XL, given Mr Jamie Veghte’ s recent retirement.
Mr Paul Brand, Catlin’s Chief Underwriting Officer, will have the position of Chair Insurance Leadership Team and Chief Underwriting Officer Insurance and will have responsibility for capital allocation and purchasing outward reinsurance for the group. Additionally, Ms Kelly Lyles, currently XL’s Head of Professional Insurance will assume the position of Deputy Chair Insurance Leadership Team and Chief Regional Officer Insurance. Mr Brand and Ms Lyles will both report to Mr McGavick and together will lead all aspects of insurance for the combined company.
The integration planning team will be led by Mr Myron Hendry, XL’s Chief Platform Officer, with support from the extended leadership teams of XL and Catlin. The combined company will identify additional roles for many of Catlin’s senior management team post-integration, and plans to create an organisation that draws upon the talent of both XL and Catlin’s functional teams.