Lloyd's, once a famous name in the insurance world, now has only a handful of companies listed on the London Stock Exchange. Most recently, Novae, one of Lloyd's members, was sold to Axis Capital Holdings for 468 million pounds.
Novae Group (NVA.L), a Lloyd's of London insurer, said it has agreed to be acquired by Axis Capital (AXS.N), a Bermuda-based specialty insurance and reinsurance company, for 467.6 million pounds (US$605.07 million) in cash. Novae's share price surged more than 20% on the news.
The offer of 7 pounds per Novae share represents a premium of more than 20% over its Wednesday closing price.
The deal is expected to close in the fourth quarter of this year, will add to Axis's revenue in its first year, and will strengthen Axis's position in the Lloyd's of London insurance market.
After Novae is acquired, only three Lloyd's members will remain listed on the London Stock Exchange: Beazley, Hiscox and Lancashire. In recent years, Lloyd's members Amlin and Brit have been acquired by overseas peers.
Axis's acquisition of Novae comes after the depreciation of the pound. Axis will pay Novae 700 pence per share, a 20% premium based on Novae's share price on July 4, and 1.5 times Novae's net asset value.
Axis CEO Albert Benchimol said: "We are pleased to announce the acquisition of Novae, which fully aligns with Axis's international specialty insurance growth strategy. The businesses of Novae and Axis are highly complementary. The acquisition of Novae will allow the company to build a roughly US$2 billion player in the London specialty insurance market. Novae's business covers property, casualty, marine, aviation and political risk insurance. Once completed, the acquisition will greatly enhance the depth and breadth of our products, strengthen our underwriting capacity and better serve our customers."
The acquisition of Novae is not Axis's first attempt to expand its business through acquisitions. In 2015, Axis lost its US$6.9 billion bid for international reinsurer Partner Re to Exor, the Italian investment company controlled by the Agnelli family.
Novae's financial condition has been weak; last year its share price plunged after rising to nearly 850 pence per share. The industry has long rumored that multiple companies planned to acquire Novae. Novae Chairman John Hastings-Bass said: "In recent years, our company has made progress in both underwriting and profit growth, but Novae has never made its mark in international markets. Axis's business success will give Novae a boost after the acquisition."
Source: Reuters, 2017-07-06