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Amlin snaps up Fortis for $496m

Jerry Frank - Wednesday 3 June 2009

LLOYD’S insurance heavyweight Amlin has snapped up struggling Fortis Corporate Insurance from the Dutch government for €350m ($496.2), in the biggest marine insurance-related deal of the year.

The takeover creates a combined £1.7bn ($2.8bn) written premium business, giving Amlin a substantial foothold in the continental European marine insurance market.

Amlin chief executive Charles Philipps said: “This acquisition demonstrates the scope of our ambition to build a globally diversified business focused in markets which require our specialist skills and have high barriers to entry.”

The deal puts an end to the recent uncertainty over the future of the Fortis group’ insurer, which was nationalised by Dutch authorities after its parent was broken-up as it teetered on the brink of bankruptcy in October last year.

Fortis Corporate Insurance is the leading provider of marine, liability and commercial property insurance in the Netherlands and Belgium.

Marine lines represent €374m, or just under half, of Fortis Corporate Insurance’s gross written premiums last year, with property some 21% and liability 15%.

The premier continental European marine insurer wrote general cargo and commodities and ocean hull business, as well as builders’ risk, yacht, shipowners’ liability and inland hull.

Amlin suggested that the move was the beginning of further acquisitions, giving it “immediate scale in a key strategic market and opportunities for future expansion.”

Amlin, which writes business in both Lloyd’s and Bermuda, expects to complete the takeover by the end of September, pending the green light from the Dutch Central Bank and Amlin shareholders.

Separately, Amlin announced it would raise around £76m in a placement of 23.5m or 5% of its shares.

Amstelveen-based Fortis Corporate Insurance is the leading marine insurer in the Netherlands and Belgium and is a top three liability insurance provider in both markets.

Fortis Corporate Insurance, which comes with 338 people offices in Rotterdam, Antwerp, Brussels and Paris, generated €763m gross written premiums last year, up from €656m in 2007.

Amlin also acquires a presence in France, where Fortis set up its Paris office only last year with the aim of writing €30m of gross written premiums by 2011.

The Low Countries non-life insurance giant has struggled in recent years, generating a €31m pre-tax loss on an €11m underwriting deficit in 2008.

Softening rates, a high frequency of large claims, investment losses on its equity and bond portfolios and nationalisation combined last year to hit profit.

Amlin said its new continental European arm will be a core part of its group, but will remain a standalone entity managed by its existing management team.

Patrick Coene, chief executive of Fortis Corporate Insurance, said its new parent offered financial strength, underwriting expertise and risk management.

“After a period of uncertainty, we are now again in a strong position to build our future,” said Mr Coene.

“We have made great strides in agreeing with ex-Fortis group companies about the transition process and we are ready to start a new future with our new shareholder.”