Markel announces $3 billion acquisition

Markel's headquarters at Innsbrook

One of Markel’s offices at Innsbrook. (Photo by Michael Schwartz)

Grab the sunblock and get used to driving on the other side of the road: A Richmond insurance company is buying its way into the Bermuda reinsurance business.

In one of the richest deals announced in 2012, Innsbrook-based specialty insurer Markel on Wednesday unveiled a pending $3.13 billion acquisition of Alterra Capital Holdings.

The Bermuda-based company specializes in reinsurance, which is the business of insuring insurance companies.

It’s the biggest acquisition in Markel’s history.

“Markel believes [the deal] will strengthen its franchise and brand as a global leader in specialty insurance,” Markel spokesperson Bruce Kay said. “We’re playing in a global world, and we need to compete. We think this will get us there.”

The boards of both companies have approved the deal. Shareholders on both sides and federal and state regulators must still approve the acquisition, which is expected to close in the first half of 2013.

The deal will be funded with $1 billion in cash and $2.1 billion in Markel stock. Alterra shareholders will receive 0.04 shares of Markel common stock and $10 cash for each share of Alterra stock.

Many of Alterra’s 490 employees will be added to Markel’s roster of 2,666.

Markel’s leadership team will stay in place following the deal, as will Alterra’s top executives and underwriters.

Alterra’s 78-person Richmond office on Stony Point Parkway was started by Markel alumni, Kay said.

The Alterra brand will eventually be phased out in favor of the Markel name.

The acquisition will give Markel its first firm foothold in reinsurance, an obscure sector of the insurance industry that is largely based in Bermuda because of its tax code.

Insuring insurances companies also gives Markel a chance to go after larger corporate customers, including many Fortune 1000 companies, Kay said.

“We’re really getting global reinsurance expertise and a team that knows how to do it,” he said.

Once combined with Alterra, Markel will have a $6 billion capital base, not quite three times the size of Markel’s current capital base.

Markel brought in $765 million in revenue during the third quarter and $2.1 billion through the first nine months of the year.

Alterra, by comparison, had total revenue of $407 million in its most recent quarter and $1.25 billion through the first nine months of 2012.

Alterra’s stock is publicly traded on both the Nasdaq and the Bermuda stock exchanges. Markel’s stock, which trades on the New York Stock Exchange, closed Wednesday at $435 per share.

Markel's headquarters at Innsbrook

One of Markel’s offices at Innsbrook. (Photo by Michael Schwartz)

Grab the sunblock and get used to driving on the other side of the road: A Richmond insurance company is buying its way into the Bermuda reinsurance business.

In one of the richest deals announced in 2012, Innsbrook-based specialty insurer Markel on Wednesday unveiled a pending $3.13 billion acquisition of Alterra Capital Holdings.

The Bermuda-based company specializes in reinsurance, which is the business of insuring insurance companies.

It’s the biggest acquisition in Markel’s history.

“Markel believes [the deal] will strengthen its franchise and brand as a global leader in specialty insurance,” Markel spokesperson Bruce Kay said. “We’re playing in a global world, and we need to compete. We think this will get us there.”

The boards of both companies have approved the deal. Shareholders on both sides and federal and state regulators must still approve the acquisition, which is expected to close in the first half of 2013.

The deal will be funded with $1 billion in cash and $2.1 billion in Markel stock. Alterra shareholders will receive 0.04 shares of Markel common stock and $10 cash for each share of Alterra stock.

Many of Alterra’s 490 employees will be added to Markel’s roster of 2,666.

Markel’s leadership team will stay in place following the deal, as will Alterra’s top executives and underwriters.

Alterra’s 78-person Richmond office on Stony Point Parkway was started by Markel alumni, Kay said.

The Alterra brand will eventually be phased out in favor of the Markel name.

The acquisition will give Markel its first firm foothold in reinsurance, an obscure sector of the insurance industry that is largely based in Bermuda because of its tax code.

Insuring insurances companies also gives Markel a chance to go after larger corporate customers, including many Fortune 1000 companies, Kay said.

“We’re really getting global reinsurance expertise and a team that knows how to do it,” he said.

Once combined with Alterra, Markel will have a $6 billion capital base, not quite three times the size of Markel’s current capital base.

Markel brought in $765 million in revenue during the third quarter and $2.1 billion through the first nine months of the year.

Alterra, by comparison, had total revenue of $407 million in its most recent quarter and $1.25 billion through the first nine months of 2012.

Alterra’s stock is publicly traded on both the Nasdaq and the Bermuda stock exchanges. Markel’s stock, which trades on the New York Stock Exchange, closed Wednesday at $435 per share.

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