The broad of Brit insurance holdings has said it is to recommend to shareholders to accept a bid for the company from private equity operation Apollo.
Under the terms of the agreement Brit would be acquired by Achilles which is a newly-incorporated company formed on behalf of, and which will be majority-owned by, funds managed by Apollo Management VII. and funds advised byCVC Capital Partners Limited.
The deal would see all accepting Brit Shareholders entitled to receive £10.45 in cash plus a Contingent Value Payment (CVP) of up to £0.25 in cash per Brit share. In addition, Entitled Brit Shareholders, being Brit Shareholders who were on the register of Brit Insurance on 22 October 2010 will remain eligible to receive the £0.30 Capital Distribution payable in cash on 7 December this year.
Brit Chairman John Barton said: “I am pleased that we have reached agreement on the terms of the Offer which values Brit Insurance’s shares at a significant premium to the prevailing market price prior to the commencement of the Offer Period. Having given full consideration to the Offer from Achilles, the Independent Directors believe it represents good value for Brit Shareholders and recommend that they accept the Offer.”
The recommendation came as Brit issued its interim statement for the third quarter of the year in which Brit said the expectation was that competition would continue well into next year.
It added: “The outlook for Global Markets’ key business lines is finely poised and in this context a focus on portfolio management and risk selection are the key to outperformance. The highest risk adjusted returns exist within Reinsurance where the Group continues to operate close to its maximum catastrophe risk appetite.”
Chief Executive Dane Douetil said: “The third quarter saw broadly a continuation of the trends experienced in the first half of the year. Underwritingremained competitive in most classes whilst the Group again experienced better than expected investment returns. Our approach has also been consistent with previous quarters, with our underwriters strongly defending business that can be renewed at adequate prices whilst being prepared to walk away from inadequately rated business.
“Cost control has been an important priority as we shrink the top line in response to a weakening market. We will go into 2011 well equipped to deal with what we expect to remain a competitive marketplace.”