AXIS Capital snaps up Novae for $604m

AXIS Capital is to acquire Lloyd's insurer Novae Group for £468 million ($604 million) in an all-cash deal based on paying 700 pence per Novae share. The transaction is expected to close in the fourth quarter of 2017.

The price represents a 20 percent premium on the closing price of Novae’s shares on July 4, the day before the announcement, a 29 percent premium on its average share price during the month prior, and a multiple of 1.5x of Novae’s net tangible book value at the end of 2016.

Following the completion of the deal, Matthew Fosh, the chief executive of Novae, will be appointed executive chair, Europe. He will report to Albert Benchimol, the president and CEO of AXIS Capital.

Additionally, Robert Forster, the chief underwriting officer of Novae, will have a senior underwriting management role on the leadership team of AXIS’s international insurance division, which is led by CEO Mark Gregory.

AXIS has stressed that the deal boosts its international specialty insurance business, creating a $2 billion insurer in the London specialty market and a top ten insurer at Lloyd’s. Based on the companies’ 2016 results, the combination will create a global specialty re/insurer with gross written premiums in excess of $6 billion.

Benchimol said: “We are very pleased to announce this proposed acquisition of Novae which will create a c.$2 billion player in the London specialty market, anchored as a top 10 insurer in the Lloyd’s market. The acquisition is fully aligned with AXIS’s international specialty insurance growth strategy and will combine two highly complementary businesses, substantially enhancing our depth and breadth of product, underwriting expertise, and leadership capabilities to better serve our clients and brokers.

“We are excited about the opportunity to leverage the focused and profitable specialty insurance business Novae has created as part of a substantially larger group, with a larger capital base and a global platform.

“We expect the combined operations to benefit substantially from investments already made by AXIS to drive efficiencies across its international specialty insurance business and firmly believe this combination will create significant value for AXIS’s shareholders with limited execution risk. This transaction is expected to deliver meaningful earnings and ROE accretion within the first year after close.

“We very much look forward to welcoming Novae’s employees to AXIS. Novae’s business is underpinned by the high calibre of its team, including its market leading underwriting talent, who we expect to thrive at AXIS, benefitting from access to a global platform and expanded resources. Our organizations share likeminded corporate cultures and we are deeply committed to ensuring a smooth integration process and creating a positive, collaborative environment that will breed success.”

Peter Wilson, CEO of AXIS Insurance, added: "By acquiring Novae, we are strengthening our position in the London market while bringing aboard a complementary business and tremendous talent. Novae is known for its market-leading underwriting talent, who we expect will thrive at AXIS and we are so glad to welcome them to our team."

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