Brit Insurance has accepted a buyout offer from PE shops Apollo Management and CVC Capital Partners, according to Reuters. The deal values the insurer at up to 888 million pounds ($1.4 billion). For the nine months ending Oct. 25, gross written premiums at Brit Insurance fell 9 percent to 1.22 billion pounds, in part due to compeition in underwriting.
(Reuters) – Brit Insurance accepted a formal offer from buyout firms Apollo Management and CVC Capital Partners after recommending an approach which values Brit at up to 888 million pounds ($1.40 billion).
Lloyd’s of London insurers, which offer cover against large-scale risks such as natural disasters, have emerged as potential takeover targets because cyclically low insurance prices have weighed heavily on their shares.
Brit’s chief executive Dane Douetil said conditions were now ripe within the sector for consolidation given upcoming Solvency II requirements, which may create capital issues for the smaller players, and the short-term volatility weighing on results.
“Certainly, it is more likely to have more consolidation in the next 12 to 24 months than there has been in the last 5 years,” Douetil told Reuters.
Earlier this month, insurer Hardy rebuffed an initial 300 pence per share approach from peer Beazley .
Brit Insurance said in a separate statement on Tuesday that overall gross written premiums for the 9 month period to Oct 25 fell 9 percent to 1.22 billion pounds as underwriting conditions remain competitive.
Brit Insurance said the offer from the Apollo, CVC consortium valued the business at 10.75 pence per share, but included a provision through which shareholders would receive a further 25 pence per share should Brit’s net tangible asset value be more than 11 pounds per share at the end of 2010.
This represents a premium of 47-51 percent to Brit’s closing share price of 729 pence on June 10 — the last day before the offer period started.
Douetil said the deal represented a good price for shareholders. Brit shares were up 2.4 percent at 1045 pence by 0742 GMT.
“It will allow us to build the business at the right part of the cycle, to be more nimble in what we do and to have a longer term perspective,” said Douetil. ($1=.6353 Pound) (Reporting by Lorraine Turner, Editing by Sudip Kar-Gupta)