Property/casualty insurer Markel is buying Alterra Capital in a cash-and-stock deal worth approximately $3.13 billion, according to a statement from Markel.
Following the close of the transaction, Markel is expected to write annual gross premiums of approximately $4.4 billion and to have approximately $6 billion in equity with capital flexibility to support future growth.
According to Steven Markel, vice chairman of Markel, the insurer is looking forward to bringing in a complementary business profile, which includes reinsurance and large-account insurance, as a means of diversifying risk. Following the close of the transaction, according to the release, Markel's business is expected to be approximately 50 percent short-tail, 50 percent long-tail; 67 percent insurance and 33 percent reinsurance.
"The combination of Alterra with Markel will create an incredibly strong company in global specialty insurance and investments. The demonstrated track record of underwriting discipline in niche market segments by both companies, along with Markel's proven asset management strengths, should benefit all stakeholders,” commented Marston Becker, president and CEO of Alterra, who is expected to leave the company following the close of the transaction.
The merger also increases Markel’s investment portfolio to $16 billion.
Upon closing, two directors designated by Alterra's current board will be added to the board of directors of Markel. In addition, Markel's existing shareholders will own approximately 69 percent of the combined company on a fully diluted basis, with Alterra's shareholders owning approximately 31 percent. Completion of the transaction is contingent upon customary closing conditions, including shareholder and regulatory approvals, and it is expected to close in the first half of 2013.
