XL Catlin, the global brand name used by XL Group Ltd.’s XL, has entered into a definitive agreement to acquire Brooklyn Underwriting Pty Limited and Brooklyn IT Pty Limited (“Brooklyn”) from their beneficial owner Paul Hines. The buyout will enable XL Catlin to address the growing demands and sophisticated needs of clients and brokers in Australia.
The transaction is expected to be completed at the beginning of the fourth quarter of 2016.
Rationale of the Acquisition
Sydney, Australia-based Brooklyn, a specialist underwriting agency and a Lloyd’s approved coverholder, boasts of operations for more than two decades. The underwriting agency provides specialist insurance products for small and medium-sized enterprises (SMEs), ranging from high risk property to complex liability. These products cover the customized liability products for specific professions.
This acquisition seems a perfect fit for XL Catlin as Brooklyn complements its commitment toward underwriting, claims and service excellence. The actions will also help XL Group to solidify its presence in Australia.
Brooklyn, on the other hand, stands to benefit from the acquirer’s extensive capabilities, global expertise, financial strength and efficient claims service capabilities.
Compelling Inorganic Growth Story
XL Group pursues strategic acquisitions to diversify its portfolio and strengthen its global footprint as well as fuel its growth. In this respect, the most significant is the acquisition of Catlin Group Limited in May 2015. XL Group targets a premier position in global specialty insurance and reinsurance markets and hence, acquired Catlin Group. Following the acquisition, XL Group changed its brand name to XL Catlin. Also, XL America, Inc., its indirect wholly owned subsidiary, acquired Allied International Holdings, Inc., an ace insurer of the outdoor entertainment industry in the U.S., this February.
XL Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Insurers Ramping Up Growth via Acquisitions
Acquisitions are a well-accepted strategy for growth among insurers. Recently, Brown & Brown of Connecticut, Inc., a subsidiary of Brown & Brown, Inc. BRO, acquired the assets of Kronholm Insurance Services, Inc. Also, Arch Capital Group Ltd. ACGL announced its decision to acquire United Guaranty Corporation and AIG United Guaranty Insurance Limited from the parent company, American International Group, Inc. AIG last month.
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