AXIS Capital Adds Novae Group, Ramps Up Lloyd's Presence

AXIS Capital Holdings Limited (NYSE:AXS) took over Novae Group plc for 715 pence per share. However, the integration will take effect from Oct 18, once European Commission approves the transaction.

In July, AXIS Capital announced to buy Novae Group plc for $605 million or 700 pence in cash to ramp up the acquirer’s Lloyd’s presence. Subsequently in August, the insurer raised the offer price to 715 pence in cash per Novae share.

London-based Novae Group is a diversified property and casualty insurer, operating through Syndicate 2007 at Lloyd’s. With this takeover, AXIS Capital will consolidate its Lloyd presence.

Lloyd’s platform has become an attractive destination for buyouts by companies to enhance product and service portfolio. A strong financial position backed by a sustained solid operational performance propels AXIS Capital to pursue growth initiatives.

With Novae Group’s acquisition, AXIS Capital will become an insurer worth $2 billion in the London specialty market. This positions the acquirer among the top 10 insurers at Lloyd’s. The transaction will be accretive to the acquirer’s bottom line and return-on-equity in the first year, post closure.

Conversely, Novae Group can benefit from AXIS Capital’s strong financial positon as well as compelling resources to expand underwriting businesses.

AXIS Capital eyes strategic acquisitions to gain competitive advantage. Last November, the company had announced to acquire the general aviation insurance and reinsurance leader, Aviabel, to leverage status in the global aviation market. With the A&H (Accident & Health) business gaining traction, AXIS Capital bought Ternian Insurance Group to brace A&H retail distribution in the United States.

Shares of AXIS Capital have underperformed the industry year to date. The stock has lost 12.3% against the industry’s rally of 11.3%. Nonetheless, we expect the company’s sustained efforts to expand capabilities and accelerate growth to drive the shares higher.

AXIS Capital presently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here..

Insurers Pursuing Inorganic Path

Fidelity National Financial, Inc. (NYSE:FNF) has announced that its FNF Group has recently acquired a majority stake in SkySlope, Inc. to help the real estate agents and brokers gain more customers and close more transactions. Arthur J. Gallagher & Co. (NYSE:AJG) has recently purchased Premier Insurance, LLC to expand in Florida. Brown & Brown, Inc (NYSE:BRO) has completed the buyout of all herronpalmer LLC’s assets through subsidiary Pacific Resources Benefit Advisors, LLC to fortify its foothold in the third-party administration market.

Will You Make a Fortune on the Shift to Electric Cars?Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think. See This Ticker Free >>