Novae execs stress importance of scale as they succumb to AXIS overtures

Senior executives at Novae Group have highlighted the increasing need for scale in the risk-transfer business as the justify agreeing to the firm’s  sale to AXIS Capital for £468 million ($604 million).

The all-cash deal 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.

In a message that other smaller carriers will note, both Matthew Fosh, the chief executive of Novae, and John Hastings-Bass, its chairman, have highlighted the increasing benefits of scale and a global presence in describing the merits of the deal.

Hastings-Bass in particular stressed that while Novae has performed well on a standalone basis, this deal provides certainty for shareholders and scale for the combined entities.

“The Board of Novae is pleased to unanimously recommend the AXIS offer, which represents an attractive outcome for Novae and provides certainty to Novae Shareholders at an attractive premium to the share price and net tangible assets per share,” Hastings-Bass said.

“Over recent years, Novae has made significant progress on a standalone basis in developing its underwriting franchise and growing premiums in its targeted lines of business. However, it 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.”

Fosh added: "By joining AXIS, we are becoming part of a global leader in specialty insurance and reinsurance. AXIS is an ideal partner for Novae’s clients and our employees – and I am particularly enthused for our employees who will benefit from having access to the financial strength of a major global carrier and to the enhanced tools, support and resources required to grow our portfolio of underwriting businesses.

"Our organisations share like-minded corporate cultures grounded in a client-centric, innovative and entrepreneurial mentality," Fosh added. "Moreover, our businesses are highly complementary, creating significant potential for our combined platform.

“The combination of Novae and AXIS brings together two complementary businesses. We have long held AXIS in high regard, a company with whom we share a strong cultural compatibility. The transaction will provide the Novae business with the increased scale and financial resources needed to succeed in the current market. We look forward to working closely with the AXIS team on this next part of our journey.”

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