American Financial Group pays $75m for majority stake in the Lloyd's insurer
American Financial Group today announced it has entered into a definitive agreement to become the majority shareholder in Marketform Group Limited.
Under the agreement, AFG will pay approximately $75 million, which may be adjusted based on Marketform's final balance sheet. As a result, AFG will effectively own approximately 67% of Marketform and Marketform's management and staff will own the remaining one-third interest.
AFG has also provided a $46 million letter of credit as a corporate member of Lloyd's Syndicate 2468, which is managed by Marketform. As a result of this action and the Marketform acquisition, AFG will be providing approximately 51% of the capital to Syndicate 2468.
This acquisition is expected to increase AFG's gross written premiums by approximately $150 million in 2008. While the transaction is subject to customary conditions and regulatory approvals, a closing is anticipated in the early part of 2008.
"We are very excited to enter into this new relationship with AFG and look forward to working with the Great American Insurance team," said Holly Bellingham, Chairman of Marketform.
"The new investment from AFG gives us a solid financial platform that will help take the company to the next level of development, providing us with new opportunities, new lines of business to underwrite and ultimately further profitable growth."
Carl Lindner III, Co-Chief Executive Officer of AFG, said: "We are enthusiastic about our ability to partner with Marketform's management and employees to grow our business internationally. We feel that Marketform's existing book of business and underwriting philosophy are a good match for AFG and Great American Insurance Group. We are committed to expanding Marketform's current product offerings into several of our specialty businesses. This acquisition supports one of our strategic objectives of increasing AFG's geographic coverage. We expect this transaction to add approximately $.03 per share to AFG's 2008 earnings and that its earnings contribution should grow to more than three times that amount over the next four years. We continue to expect our core net operating earnings guidance for 2008 to be between $3.75 and $3.95 per share."
