XL shares surge on buyout interest report

  • Rumoured interest: Allianz has reportedly been eyeing XL Group as a potential buyout target

Shares of Bermudian-based XL Group surged nearly 13 per cent yesterday on reports of buyout interest from German insurance giant Allianz.

The insurer and reinsurer’s shares rose $4.83, or 12.9 per cent, to close on $42.17 in Nasdaq Stock Exchange trading yesterday, giving the company a market capitalisation of about $10.8 billion.

Bloomberg reported the rumour yesterday, citing people with knowledge of the matter, and said both Allianz and XL declined to comment.

The report stated that Allianz’s interest was preliminary and may not lead to a takeover.

The German company is looking at XL as potential target to grow its US casualty business, according to the report.

Another report on potential deal activity in the reinsurance sector said Japan’s Softbank Group was in advanced talks to buy a stake in Swiss reinsurer Swiss Re worth $10 billion or more.

That report surfaced in the Wall Street Journal, which cited people familiar with the matter.

The talks still could fall apart and there might not be a deal, the newspaper said.

The reinsurer’s shares closed 1.78 per cent higher at 90.18 Swiss francs yesterday.

Swiss Re executives recently travelled to Tokyo to discuss the sale of up to a third of the reinsurer with Softbank’s chief executive Masayoshi Son, said the Journal. Son has invested in a variety of companies and technologies, including e-commerce, driverless cars and virtual reality, and Softbank is majority owner of US wireless company Sprint Corp.

Swiss Re has a market cap of almost $33 billion.

Speculation of mergers and acquisitions in the Bermuda market has been rife since American International Group agreed last month to buy island-based Validus Holdings in a deal worth $5.6 billion.

Buckingham Research analyst Amit Kumar said last month that Aspen Insurance was the most likely of the Bermuda reinsurers to feature in consolidation, followed by RenaissanceRe.

The analyst added that XL was too large to be easily integrated, while Axis’s acquisition of Novae last year made it less likely to be involved in another merger.