XL Catlin deal completes, new re/insurance brand launches next week

by Artemis on May 1, 2015

Another re/insurance sector M&A deal has completed, meaning there is one less participant in the market. Global insurance and reinsurance firm XL Group and Catlin’s deal closes today with the new brand XL Catlin is set to launch next week.

XL CEO Mike McGavick commented on the M&A’s completion; “After nearly two years of discussions, and several months of intense planning, we are extremely pleased to officially be one company. Starting today, we are a larger, stronger, more capable firm, with a leading presence in the global specialty insurance and reinsurance markets. Most importantly, with our combined talent and expertise we are now in an incredible position to better assist clients in solving the world’s most complex risks.”

From Monday of next week the combined re/insurer will be marketed under a new brand as XL Catlin, with a global advertising campaign and new website set to be introduced to the market along with the new XL Catlin name and brand on 5th May. The name of the parent company will remain XL Group plc.

Mike McGavick will continue as CEO, with Stephen Catlin, the original founder and CEO of Catlin Group, joining XL as Executive Deputy Chairman and will serve on the combined firm’s Board of Directors.

Catlin said; “After 30 years as CEO of Catlin, I’m excited to be taking this next step with XL. Without doubt, today is an exciting day for our new company, XL Catlin. With greater scale, capacity and an expanded platform of products and services, we look forward to creating increased value for our shareholders, clients, brokers, employees and partners.”

The senior leadership of XL Catlin has been previously announced as follows: Greg Hendrick, previously Chief Executive of Insurance Operations at XL, is now Chief Executive of Reinsurance. Paul Brand, formerly Chief Underwriting Officer of Catlin, is Chief Underwriting Officer for Insurance and serves as Chair of the Insurance Leadership Team. Kelly Lyles, previously XL’s head of Professional Lines is now Chief Regional Officer, Insurance and Deputy Chair of the Insurance Leadership Team.

So one less independent major insurance and reinsurance market exists as of today and London has lost possibly its largest organically grown specialty re/insurer. It’s hard to think that another firm like Catlin could be launched in today’s market, where efficiency is often over-riding scale in terms of importance.

It’s difficult to imagine how a traditional reinsurer could ever again attain this size over time organically, with the pressures that smaller players face to adopt new business models and efficient capital.

As the pressure to merge continues to be felt by traditional players, the landscape will shrink and options for counterparties will reduce. Whether that’s a good thing for the market remains to be seen, but it does perhaps raise the profile of other options, such as diversification of counterparties and capital using alternative markets and ILS players.

Also read:

XL buys Catlin for £2.79B. Makes XL more attractive to third-party capital.

Combined XL – Catlin a “perfect partner” for third-party capital: McGavick.

XL Catlin deal a sign of how bad the reinsurance market really is: KBW.

XL CIO Street to assist alternative capital innovation post Catlin deal.

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