Posted on 04 Mar 2010
Bermuda firms Max Capital Group Ltd. and Harbor Point Limited announced on Wednesday that the boards of directors of both companies have unanimously approved a definitive amalgamation agreement for a merger of equals. The combined company will be renamed and rebranded as Alterra Capital Holdings Limited (“Alterra”) and after the consummation of the merger will trade on the NASDAQ Global Select market under the symbol ALTE.
Under the terms of the definitive amalgamation agreement, holders of Harbor Point common stock will each receive a fixed exchange ratio of 3.7769 Max common shares for each Harbor Point share. In addition, both Max and Harbor Point intend for the board of directors of the combined company to declare a special cash dividend of $2.50 per share following closing to all shareholders of the combined company (approximately $300 million in total). Following the merger, Harbor Point shareholders will own approximately 52% of the combined company on a fully diluted basis, with Max shareholders owning approximately 48%. Completion of the transaction is contingent upon customary closing conditions, including the approvals of shareholders and regulatory approvals and notices, and is expected to close in the second quarter of 2010.
Following the close of the transaction, W. Marston (Marty) Becker, Chairman and Chief Executive Officer of Max will be President and Chief Executive Officer of Alterra and serve as a Director, while John R. Berger, Director, Chief Executive Officer and President of Harbor Point will be Chief Executive Officer of Reinsurance of Alterra and Vice Chairman of the board of directors. Mr. Berger will also chair the Board’s Underwriting Committee.
The board of directors of Alterra will consist of fourteen directors, including Messrs. Becker and Berger, in addition to six directors appointed by each of Max and Harbor Point. Michael O’Reilly, Chairman of Harbor Point’s board of directors and former Vice Chairman and Chief Financial Officer of The Chubb Corporation, will be the non-executive Chairman of Alterra’s board of directors.
Mr. Becker said, “The Max – Harbor Point transaction is a true merger of equals and brings together two strong and vibrant organizations with good balance at both the Board and senior management level, and robust balance sheets to create Alterra Capital Holdings Limited, a diversified and balanced global insurance company with much greater scale, capital, and financial strength. We have chosen Alterra, “high ground,” as our new brand name, as we believe the company will be a provider of superior security for our clients – a market leader at the pinnacle of our industry. With capital of approximately $3 billion, in a market that values strength and size as a sign of franchise safety and sustainability, Alterra will be well positioned to take full advantage of profitable growth opportunities in the P&C insurance and reinsurance markets. Harbor Point brings significant intellectual capital to Alterra with a highly experienced, very well-regarded reinsurance team that writes complementary lines to Max. Success in our business is built on talented underwriters. The core of this team has a 25-year track record of profitably navigating through all phases of the underwriting cycle. I have known John Berger for years, have admired his track record, and look forward to having him as my partner in building this great company.”
Mr. Berger said, “Alterra will benefit from an exceptionally strong combination of global underwriting platforms with limited operating overlap, and outstanding management and underwriting teams. There are very few companies of Max’s size that have the diversification and global reach it enjoys. The combination of our companies will produce a highly diverse portfolio of specialty insurance and reinsurance business, including a mix of long and short-tail lines. As a result, we expect that Alterra will have less volatile underwriting results than either of its individual components, as well as more flexibility to efficiently manage capital. I have done business with Marty over a long time, most recently, as a reinsurer of Max’s insurance business. I respect what Marty and his team have built at Max and look forward to successfully growing the combined company.”
Mr. O’Reilly said, "We believe this transaction will continue to build value for the shareholders of Harbor Point and Max. Max and Harbor Point are a compelling strategic fit, with Max adding primary insurance underwriting and multiple operating platforms to Harbor Point’s deep expertise in the reinsurance market. The companies have similar underwriting cultures and an opportunistic approach to the markets.”