LONDON – The Bermuda insurer Catlin Group said on Wednesday that it had been approached by its larger rival, the XL Group, about a possible takeover that would value Catlin at 2.53 billion pounds, or about $3.97 billion.
The deal, if completed, would bolster XL’s property and casualty insurance and reinsurance portfolio, and create a combined company worth more than $12 billion.
Catlin said XL had indicated it would be willing to pay £4.10 in cash and 0.130 of an XL share for each outstanding share of Catlin. Based on Tuesday’s closing price, that would value each Catlin share at £6.99.
“Discussions are currently ongoing between both parties and the final terms of any possible offer are subject to the completion of mutual due diligence,” Catlin said in a news release on Wednesday. “There can be no certainty that the discussions will lead to any transaction or any certainty as to the final terms on which any such transaction might proceed.”
Shares of Catlin rose 15 percent, to £6.71, in midafternoon trading in London on Wednesday.
Catlin, based in Hamilton, Bermuda, underwrites specialty property and casualty insurance and reinsurance in more than 30 business lines and posted revenue of $4 billion in 2013.
It employs more than 2,400 underwriters, actuaries, claims specialists and support staff in underwriting hubs in Britain, Bermuda, the United States, Asia, Europe and Canada and acts as a Lloyd’s of London syndicate.