Charman gets his deal as Endurance reveals plans to acquire Montpelier Re

Mr Charman allegedly saw off other suitors for Montpelier in an increasingly frantic dash for consolidation as the traditional market continues to struggle to deal with the glut of capacity provided by the capital markets through instruments such as Insurance Linked Securities. These rival suitors apparently included fellow Bermuda and London insurance group Aspen that fought off a highly public and dramatic bid from Endurance last year. Expansive Chinese insurer Fosun that recently completed its acquisition of an 85% interest in Fosun Insurance Portugal, the leading insurer in Portugal, and stakes in Bermuda-based specialty insurer Ironshore and US P&C insurer Meadowbrook Insurance Group were also thought to be interested in Montpelier Re. But Mr Charman was not going to lose out again.hideEarlier this week he cheerfully announced the agreement between his and Montpelier's board in a deal that will create a global insurance and reinsurance group with pro forma gross premiums written of $3.6bn. Assuming shareholders agree to the deal, Endurance's common shareholders' equity will increase from $2.8bn to $4.1bn, total capital will increase from $3.7bn to $5.5bn and total cash and invested assets will increase from $6.7bn to $9.3bn on a pro-forma basis. Leading investors have agreed to the deal and the early signs are that analysts prefer the look of this one to Endurance's failed bid for Aspen. Endurance said the move would increase its scale and market presence, broaden its capabilities through the addition of Montepelier's Lloyd's franchise and add an established third party capital management franchise. The deal would also be accretive to Endurance earnings per share and return on equity, said the company. Under the terms of the proposed deal Endurance will acquire Montpelier for 0.472 shares of Endurance and $9.89 in cash for each Montpelier common share. This represents $1.83bn in aggregate, based on Endurance's closing price on 30 March, 2015. The acquisition price represents a multiple of 1.21x Montpelier's fully converted book value per common share as of 31 December, 2014. Mr Charman said: "Endurance's strategic acquisition of Montpelier represents a compelling value creation opportunity for Endurance's shareholders. As a result of the transaction, we expect to achieve meaningful transaction synergies through cost savings [$60m] and greater capital efficiencies." The former Lloyd's underwriter said that the acquisition materially increases Endurance's breadth of distribution with the addition of a 'good-sized and scalable' Lloyd's platform and an attractive property catastrophe business that complements Endurance's existing reinsurance portfolio. "The acquisition also provides Endurance with a natural introduction to the business of managing insurance and reinsurance investment products for third-party capital investors," said Mr Charman. "Montpelier's historic high quality portfolio reflects a disciplined approach to underwriting that is consistent with Endurance's strong risk management and underwriting culture," he added. Christopher Harris, Montpelier's president and chief executive officer, said: "This transaction with Endurance provides significant value for Montpelier shareholders through up-front cash and an equity interest in a combined Endurance with enhanced scale, greater market presence and substantial product and geographic diversity. The combination of our balance sheets, our diverse underwriting platforms and high-quality books of business is a compelling opportunity for our shareholders, customers and distribution partners." Endurance said that the transaction is expected to complete in the third quarter of 2015, subject to the approval of both companies' shareholders and regulators.

Charman gets his deal as Endurance reveals plans to acquire Montpelier Re

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