Amlin snaps up Fortis arm in expansion
AMLIN, the insurer that trades on the Lloyd’s of London market, said yesterday it wants to raise £76m from markets to fund a buyout of a non-life insurance arm of part-nationalised Dutch bank Fortis.
The group said it has struck a €350m (£303m) deal to buy Fortis Corporate Insurance (FCI) from the Dutch government, which took control of it when it nationalised Fortis’ domestic operations.
Amlin will finance the ambitious bid partly by selling 23.5m of new shares – equivalent to five per cent of its current shares in issue – to institutional investors at roughly 339p each.
Chief executive Charles Philips said: “We’re confident that FCI is returning to profitability and going forward will generate good returns for Amlin.”
Shares of Amlin fell five per cent in early trading after Philips’ announcement, but then pared gains to close 0.74 per cent up at 341.5p after analysts were generally satisfied the deal will pay off.
Credit Suisse analyst Merryleas Hyde said overall the acquisition “appears to make strategic sense in that it gives Amlin a further platform for expansion in Europe”.
RBS analyst Joanna Parsons said the fit between the firms looks good “with synergy benefits from reinsurance savings and back office functions”.
“The timing also looks good, as rates for marine start to harden and European property and liability rates stabilise,” added Parsons.
She also earnings from the acquisition should begin to accrue from 2010.
FCI specialises in marine, property, liability and fleet motor insurance, and recently launched an operation in France.
It made a pre-tax loss of €38m (£33m) in 2008, like most other similar firms, due to the falling value of investments and large claims.