04 September 2017

Axis Capital increases price to purchase Novae

Axis Capital has sweetened its offer to acquire Novae Group for GBP 477.60 million. The New York Stock Exchange-listed insurance carrier is carrying out the deal via its unit AXIS Specialty UK Holdings and has agreed to pay GBP 7.15 for each share in the target, up from the GBP 7.00 it previously offered. 

The enhanced purchase price represents a 23.0 per cent premium over Novae’s close on 5th July 2017, the last trading day before the transaction was first announced. It also implies a multiple of 1.5 times reported net tangible book value of GBP 319 million as of 30th June 2017.

The board-recommended deal is expected to close by the end of this year, subject to approvals from the Competition and Markets Authority and the Prudential Regulation Authority.

Headquartered in London, Novae underwrites insurance and reinsurance products for property, casualty and marine, aviation and political risks at Lloyd’s of London, an insurance market in the capital city. Listed on the London Stock Exchange, the group employs about 300 people in Bermuda and its home country. Novae posted revenue of GBP 678 million in the 12 months ended 31st December 2016, up almost 15 per cent on the GBP 590 million recorded in the previous year. Profit for the period totalled GBP 22 million, compared to GBP 49 million in 2015.

Based in Bermuda, Axis Capital provides accident, health, property and casualty insurance products, as well as insurance claims management services. It is also active in the US, Singapore, Canada, Europe, the Middle East and Latin America.  

Following the acquisition, the combined group will have USD 2,000 million-worth of gross premium written at Lloyd’s, making it one of the top ten largest speciality insurance players in the London marketplace.

Commenting on the investment, the target’s chief executive Matthew Fosh said: “The transaction will provide the Novae business with the increased scale and financial resources needed to succeed in the current market.”

According to Zephyr, the M&A database published by Bureau van Dijk, the deal is set to be Axis Capital’s largest acquisition by value on record. It is also the fifth-biggest takeover of an insurance broker to have been announced in 2017 to date. La Caisse de depot et placement du Quebec and KKR’s USD 4,300 million acquisition of USI Holdings is the largest among deals targeting the insurance agency industry announced during the same timeframe.

In 2015, Axis Capital attempted to acquire PartnerRe via a reverse-takeover worth around USD 5,226 million. The deal was later withdrawn after the purchaser was outbid by Italian investor EXOR, which took over the then NYSE-listed reinsurance carrier for around USD 6,217 million in 2016.

© Zephyr