Endurance settles on Montpelier Re

Endurance has set its sights firmly on Montpelier Re, as it unveils its proposed acquisition of the company.

This comes just months after its failed acquisition of Aspen Insurance, which cost Endurance some $13.7 million in the first half of 2014.

Under the terms of the agreement, the aggregate consideration for the transaction will consist of $450 million in cash and approximately 21.5 million Endurance ordinary shares, which are valued at approximately $1.4 billion based on Endurance’s closing price on March 30, 2015.

John Charman, Endurance’s chairman and chief executive officer (CEO), said: “Endurance’s strategic acquisition of Montpelier represents a compelling value creation opportunity for Endurance’s shareholders, with accretion to earnings per share and return on equity. As a result of the transaction, we expect to achieve meaningful transaction synergies through cost savings and greater capital efficiencies.

“Importantly, the acquisition materially increases our breadth of distribution with the addition of a good-sized and scalable Lloyd’s platform and an attractive property catastrophe business that complements our existing reinsurance portfolio. The acquisition also provides Endurance with a natural introduction to the business of managing insurance and reinsurance investment products for third-party capital investors. Montpelier’s historic high quality portfolio reflects a disciplined approach to underwriting that is consistent with Endurance’s strong risk management and underwriting culture.”

Christopher Harris, Montpelier’s president and CEO, said: “This transaction with Endurance provides significant value for Montpelier shareholders through up-front cash and an equity interest in a combined Endurance with enhanced scale, greater market presence and substantial product and geographic diversity.

“The combination of our balance sheets, our diverse underwriting platforms and high-quality books of business is a compelling opportunity for our shareholders, customers and distribution partners.”

Endurance’s board of directors will be expanded at closing to include three of Montpelier’s current directors. Endurance’s senior management team will lead the combined company from its Bermuda headquarters.

The agreement has been unanimously approved by both companies’ boards and is expected to be completed in the third quarter of 2015.