Catlin buys Wellington

Lloyd's underwriter Catlin, domiciled in Bermuda, is set to takeover Wellington Underwriting and create the largest single underwriting agency at Lloyd's.

The offer values Wellington's shares at 121 pence and the issued share capital of Wellington at £591m. Wellington shareholders will own approximately 34% of the enlarged group. The acquisition will create a specialty and property casualty insurer of around $2.4bn (£1.3bn) gross written premium and a market capitalisation of £1.3bn.

Commenting on the offer, Preben Prebensen, chief executive of Wellington, said: "The combination with Catlin accelerates Wellington's planned entry into the Bermuda market and facilitates a restructuring of our relationship with third-party capital providers without recourse to shareholders, while at the same time creating a group with the scale, diversity and depth of talent to compete on a global stage."

A Catlin spokesman said: "Our lines of business complement each other. Although larger isn't necessarily better - stronger is."

Catlin UK has six regional offices dealing with between 100 and 150 brokers and the majority of wholesalers at Lloyd's.

The acquisition is expected to be completed by 31 December.

A source close to Catlin said there may be some job cuts where there was duplication, as Catlin examines where savings could be achievable. The source added this was likely to happen in 2008, rather than next year, and was unlikely to include underwriters. Catlin has said it could make cost savings of $70m each year, including from taxation and reinsurance.

Catlin was established in 1984 by Stephen Catlin, when he set up Catlin Underwriting Agencies to manage Lloyd's marine syndicate 1003.