Axis Capital to buy Lloyd’s of London insurer Novae for $ 605 m

Reuters: Lloyd’s of London insurer Novae Group Plc has agreed to be taken over by Axis Capital Holdings Ltd, a Bermuda-based speciality insurer and reinsurer, for 467.6 million pounds ($ 605.07 million) in cash, sending its shares soaring over 20%.

Axis Chief Executive Albert Benchimol said the acquisition of Novae, which covers property, casualty, marine, aviation and political risk, would create a roughly $2 billion player in the London speciality market.

The deal, expected to close in the final quarter of the year, will add to Axis’ earnings in the first year and allow it to bulk up in the Lloyd’s insurance market.

“It (Novae) remains a relatively small player in a global industry. Axis is a substantial and successful business which represents an excellent partner for the Novae business, its customers and employees,” John Hastings-Bass, chairman of Novae, said.

Axis operates in the United States, Europe, Singapore, the Middle East, Canada and Latin America.

The deal has no termination fee, implying confidence from both parties that a counterbid was unlikely, Eamonn Flanagan, analyst at Shore Capital, said.

Insurers have been preparing for a wave of mergers and acquisitions, as valuations in the Lloyd’s insurance market became more attractive to overseas buyers due to a fall in the value of the pound after Britain voted to leave the European Union.

Lloyd’s companies such as Hiscox, Lancashire and Beazley have long been seen as acquisition targets, and insurers Amlin, Brit and Catlin have all been snapped up by overseas insurers in recent years.