Brit Insurance became the latest Lloyd’s of London insurers to fall into foreign hands yesterday after accepting a £1.22bn takeover bid from a company run by “Canada’s Warren Buffett”.
The former England cricket team sponsor is being sold to Fairfax Financial for 305p a share, a 27 per cent premium on the 240p investors paid to back the company’s flotation last year.
Analysts predicted that rivals, including Beazley, Lancashire and Novae, could now be in the sights of foreign insurers and private-equity firms keen to expand their presence in Lloyd’s, the world’s largest insurance market.
Last year, Catlin, also based in the prestigious market, succumbed to a £2.8bn bid from US-listed XL. Omega Insurance and Chaucer are among the others to be bought in recent years, while in the wider reinsurance industry, Axis Capital and PartnerRe are planning an $11bn merger.
Toronto-based Fairfax is a holding company founded and run by Indian-born entrepreneur Prem Watsa. As well as insurance companies, Fairfax owns a large stake in BlackBerry, although an attempt to buy the mobile phone operator for $4.7bn in 2013 failed.
In a note titled “Another one bites the dust”, Shore Capital analyst Eamonn Flanagan said that the deal leaves the remaining five quoted Lloyd’s players attractive to buyers. He said: “Beazley, whilst not cheap, offers a significant level of diversification for many potential predators, with a high-quality speciality book.”
If the deal is completed, Brit will no longer be London-listed, although its existing management team, led by chief executive Mark Cloutier and chairman Richard Ward, will remain with the group.