Catlin takeover by XL set to create new force in insurance

Lloyds of London insurer Catlin is reported to have agreed a £2.5bn takeover bid from US rival XL.

The FTSE 250 group revealed on Wednesday that it had been approached by XL with a 699p-a-share offer, made up of 410p in cash and 0.130 shares per Catlin share.

The two insurers have now finalised a deal, according to the Sunday Times (£). However, it is understood that a formal announcement of the acquisition will not come until the New Year.

The final offer for Catlin, which specialises in specialty property and casualty insurance, as well as reinsurance, is understood to be very close to the terms announced in last week’s regulatory announcement to the market.

The offer was at a 20pc premium to Catlin’s share price before news of the approach broke and shares in the business surged more than 15pc when the company confirmed it had received a bid.

Catlin was founded by chief executive Stephen Catlin 30 years ago and has since grown into an international business employing 2,400 staff writing gross written premiums of $5.3bn (£3.4bn) last year from its six hubs in London, Bermuda, the US, Asia Pacific, Europe, and Canada.

Mr Catlin still holds almost 1.7pc of the company and a deal at the terms announced values his stake at £42.5m.

Last week Catlin hinted that it was in favour of the tie-up, saying “a combination of XL and Catlin would create a leading player in property and casualty insurance and reinsurance and expand opportunities for the combined underwriting team in the global marketplace”.

A combined Catlin and XL would be a world leader in specialty and property catastrophe markets and and a top 10 player in the global reinsurance market.

A takeover of Catlin would also boost XL’s insurance business and diversify it away from competition pressures in the reinsurance space. XL is listed in New York but headquartered in Dublin.

Catlin declined to comment and XL could not be reached for comment.