Lloyd’s of London insurer Novae will be acquired by Axis Capital Holdings, a Bermuda-based specialty re/insurer in a transaction worth US$605 million, pending regulatory approval.

Novae specialises in property & casualty, marine, aviation, and political risk insurance, and the acquisition will create a combined entity with gross written premiums exceeding US$6 billion, said Axis in its press statement. The deal is expected to close in the last quarter of 2017.

It added that upon the completion of the transaction, Novae chief executive Matthey Fosh will assume to role of Axis’ executive chairperson for Europe. He will report to Axis Capital CEO Albert Benchimol.

“The acquisition of Novae is a great opportunity to accelerate the breadth and depth of talent, lines of business, and leadership positions that we are developing in the London market for specialty risks, advancing our growth and enabling us to better serve our clients,” said Benchimol.

However, Neptune Investment Management, which holds a 16% stake in Novae, said that the deal was undervalued by around 5% to 6%.

"The buyer has approached at a time of short-term weakness in the share price," Neptune's Mark Martin, head of UK equities, told Reuters. He pointed out that there could be other potential suitors that could acquire Novae at a fair price.

Novae’s share price has declined 26% over the past nine months, as it was hit by lower-than-expected underwriting contributions and changes to the UK’s Ogden rule that affected profits.


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