XL Group Plc Announces Acquisition of Catlin Group Limited

Dublin, Ireland (ots/PRNewswire) -

- Expected to Create a Leader in Global Specialty Insurance and
Reinsurance Markets

- Expected to Create Double Digit EPS and Meaningful ROE Accretion

XL Group plc today announced that it has entered into an
agreement under which XL will offer to acquire all of the capital
stock of Catlin Group Limited to form a combined business which is
expected to have a leading presence in the global specialty insurance
and reinsurance markets. Under the terms of the transaction, XL will
acquire all of Catlin's common shares for consideration of 388 pence
in cash and 0.130 share of XL for each Catlin common share. On the
basis of the closing price of an XL share on 8, January of $35.42 the
offer values Catlin at 693 pence per share. This represents a
transaction equity value of approximately $4.1 billion dollars. In
addition, Catlin shareholders will receive a 22p final dividend to be
paid in Q1 2015.

The transaction represents a premium of 23.5% to Catlin's closing
share price as of December 16, 2014 the date prior to each company
having publicly confirmed discussions regarding a transaction. The
transaction is structured as a scheme of arrangement and is expected
to close mid-2015, subject to approval of Catlin shareholders and
sanction by the Supreme Court of Bermuda, customary regulatory
approvals and anti-trust clearances, and other customary closing
conditions. Following the completion of the transaction, the name of
the parent company of the combined group will remain XL Group plc,
and the newly combined company will be marketed as XL Catlin,
reflecting the strong reputation of both brands.

XL CEO Mike McGavick commented: "We are delighted to announce this
compelling combination which positions us strongly to provide more -
and even better - answers for the world's most complex risks while
enhancing our opportunities to create value for shareholders and
better serve clients and brokers. We believe the transaction will
accelerate each company's strategy, and address the meaningful
structural changes we see shaping the P&C sector. Specifically, the
combination will add immediate scale in specialty insurance, it will
create a more efficient and more capable global network by bringing
our two infrastructures together, and it creates a top 10 reinsurer
with expanded alternative capital capabilities."

McGavick continued, "This is an extraordinary opportunity to bring
together two innovators with roots in disciplined underwriting,
industry leadership and business vision, and strong cultural
alignment. I am especially pleased that Stephen Catlin will continue
on with the combined company and, on closing of the acquisition, is
expected to serve on our Board. We will benefit enormously from
Stephen's input in all strategic decisions and through our ability to
leverage his vast market network as we implement the strategy of the
new combined company. With the combination of our talented teams, we
expect to maintain strong financial fundamentals while generating
attractive economics and long-term value for shareholders including
double-digit EPS and meaningful ROE accretion."

Catlin CEO Stephen Catlin said, "XL is a compelling partner for
the Catlin business. Both businesses have been built on underwriting
excellence and benefit from strong cultural compatibility. Together,
the combined entity will be a market leading global specialty and
property catastrophe insurer which will be far better positioned to
respond to the changing dynamics that are impacting the broader
insurance and reinsurance markets. We expect the enlarged business to
benefit from increased diversification, significant further economies
of scale, strengthened franchises in each of its markets and an
improved standing with intermediaries. As a result, XL Catlin will be
better equipped to serve its clients across a range of distribution
channels and geographies with an enhanced suite of capabilities and
products."

Business Combination

With $17B of total capital and approximately $10B of net premium,
based on the December 31, 2013 audited financials of each company,
the combined company will achieve significant scale within its core
competencies of global specialty insurance and reinsurance.
Additionally, the combination of XL's and Catlin's business platforms
is expected to generate compelling benefits:


- Increased relevance with brokers through greater premium volume, broader
product offering and an expanded global network, particularly given an enlarged
Lloyd's platform with Catlin having a leading Lloyd's presence
- Top tier in many of the specialty lines in which XL has recently invested
including Political Risk and Crisis Management, will add to leading positions in
Aerospace, Fine Art & Specie, and will have a best-in class Aviation, Marine and
Energy Platform
- More effectively leveraging investments in technology and data analytics, as
well as a larger dataset to build out predictive modelling and analytics
- Approximately $2.8B of ceded reinsurance to allow for increased purchasing
power and further optimization
- Top 10 global reinsurer with multi-line capabilities, with net premiums
written nearly doubling to over $3B
- Top three broker market property cat writer with enhanced third party
opportunities - leveraging talent and relationships from each company to optimize
combined platform


Leadership and Integration

Mike McGavick will continue as CEO and it is expected that Stephen
Catlin will join the combined company as Executive Deputy Chairman
upon the closing of the transaction. It is also expected that Mr.
Catlin will serve on the Board of Directors. Peter Porrino will
continue as Chief Financial Officer. An additional Catlin director
who meets applicable independence and other qualifications is also
expected to join the XL board of directors in connection with the
closing of the transaction.

Having, over the last few years, led XL's Insurance operations to
profitability, Greg Hendrick, currently XL's Chief Executive
Insurance Operations, will have the role of Chief Executive of
Reinsurance, assuming responsibility for the combined reinsurance
business and leading all alternative capital strategies. Until the
transaction closes, John Welch, currently Chief Executive of XL's
North America Reinsurance operations, will lead reinsurance
operations at XL, given Jamie Veghte' s recent retirement.

Paul Brand, Catlin's Chief Underwriting Officer, will have the
position of Chair Insurance Leadership Team and Chief Underwriting
Officer Insurance and will have responsibility for capital allocation
and purchasing outward reinsurance for the group. Additionally, Kelly
Lyles, currently XL's Head of Professional Insurance will assume the
position of Deputy Chair Insurance Leadership Team and Chief Regional
Officer Insurance. Mr. Brand and Ms. Lyles will both report to Mike
McGavick and together will lead all aspects of insurance for the
combined company.

The integration planning team will be led by Myron Hendry, XL's
Chief Platform Officer, with support from the extended leadership
teams of XL and Catlin. The combined company will identify additional
roles for many of Catlin's senior management team post-integration,
and plans to create an organization that draws upon the talent of
both XL and Catlin's functional teams.

Financials

The transaction is expected to create an attractive return profile
with earnings per share and return on equity accretion in 2016, the
first full year of combined operation, and double-digit earnings per
share accretion in 2017 upon full phase-in of expected synergies. XL
expects to issue approximately $1.8 billion of new XL shares in
connection with the acquisition. To satisfy the U.K. market practice
of transactions being "funds certain," XL has put in place a bridge
facility to backstop the funding of the cash elements of the
consideration.

It is expected that the combined entity will be able to achieve
annual cost synergies of at least $200 million, with the full level
of these recurring synergies being achieved by the end of 2017. The
primary sources of these cost synergies are expected through the
consolidation of the combined infrastructure related to technology,
real estate, and operational overlap as well as the consolidation of
business and central support functions. It is expected that the
realization of these cost synergies will result in one-time
integration costs of approximately $250 million which are all
anticipated to be incurred by the end of 2017.[1]

Conference Call and Webcast Information

A conference call to discuss the transaction will be held at 8:00
a.m. Eastern Time on Friday, January 9, 2015. The conference call can
be accessed through a listen-only dial-in number or through a live
webcast. To listen to the conference call, please dial [phone]
or [phone]: Passcode: "XL GLOBAL". For UK callers, please dial
44-20-7108-6248 or 0800-279-3953: Passcode: "XL GLOBAL". The webcast
will be available at http://www.XLGroup.com and will be archived on
XL's website from approximately 10:30 a.m. Eastern Time on Friday,
January 9, 2015, through midnight Eastern Time on Monday, February 9,
2015. A telephone replay of the conference call will also be
available beginning at approximately 10:30 a.m. Eastern Time on
Friday, January 9, 2015, until midnight Eastern Time on Monday,
February 9, 2015, by dialing 888-568-0151 or 203-369-3462.

--------------------------------------------------

1. We are applying the Code but this is not pursuant to the Code
or for the purposes of Rule 28. The basis of belief, principal
assumptions and related reports in respect of any "quantified
financial benefits statement" or statement on synergies is set out in
the offer announcement published on 9 January 2015.

Website

A slide presentation and other information regarding the
additional information regarding the transaction will be available on
http://xl.transactionannouncement.com.

Advisors

Morgan Stanley and Goldman Sachs served as financial advisors to
XL, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal
advisor. JP Morgan Chase, Barclays and Evercore served as financial
advisors to Catlin, and Slaughter & May served as its legal advisor.

About XL

XL Group plc , through its subsidiaries, is a global insurance and
reinsurance company providing property, casualty and specialty
products to industrial, commercial and professional firms, insurance
companies, and other enterprises throughout the world. XL is the
company clients look to for answers to their most complex risks and
to help move their world forward. To learn more, visit
http://www.XLgroup.com. Neither the contents of XL's website, nor the
contents of any other website accessible from hyperlinks on such
website, is incorporated herein or forms part of this document.

About Catlin

Catlin Group Limited is a global P&C insurer and reinsurer with
six underwriting hubs in London, Bermuda, the United States, Asia
Pacific, Europe, and Canada. Domiciled in Bermuda and listed on the
London Stock Exchange, Catlin has owned and managed the largest
Lloyd's syndicate since 2000. It has a network of offices in more
than 50 cities and offers access to local underwriting expertise with
more than 2,300 employees in 25 countries. Catlin shares are traded
on the London Stock Exchange . More information about Catlin can be
found at http://www.Catlin.com [http://www.castle.com ]. Neither the
contents of XL's website, nor the contents of any other website
accessible from hyperlinks on such website, is incorporated herein or
forms part of this document.

IMPORTANT INFORMATION

The information in this press release is provided for
informational purposes only and is neither an offer to purchase nor a
solicitation of an offer to sell, shares of XL or Catlin. Further to
the announcement by XL of its offer to acquire the entire issued and
to be issued share capital of Catlin (the "Offer"), (i) such Offer
will be made pursuant to the terms of a circular to be issued by
Catlin to its shareholders in due course setting out the terms and
conditions of the Offer, including details of how to vote in respect
of the Offer ("Circular"), and (ii) XL will in due course publish a
prospectus for the purposes of EU Directive 2003/71/EC (together with
any applicable implementing measures in any Member State, the
"Prospectus Directive") in relation to shares which will be issued by
it in connection with the Offer ("Prospectus"). Any decision in
respect of, or in response to, the Offer should be made only on the
basis of the information in the Circular and the Prospectus.
Investors are advised to read the Circular and the Prospectus
carefully.

This document is an advertisement and not a prospectus for the
purposes of the Prospectus Directive. Accordingly, investors should
not subscribe for, or purchase, any securities referred to in this
document except on the basis of the information to be contained in
the Prospectus, when published, which will be prepared in accordance
with the Prospectus Directive. Copies of the Prospectus, when
published, will be available from XL's website at
http://www.XLgroup.com.

No statement in this document is intended as a profit forecast or
estimate of the future financial performance of XL, Catlin or the
combined group following completion of the Offer for any period
unless otherwise stated. Furthermore, no statement in this document
should be interpreted to mean that: (i) earnings or earnings per
share for Catlin for the current or future financial years would
necessarily match or exceed the historical published earnings or
earnings per share for Catlin; or (ii) earnings or earnings per share
for XL for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per
share for XL.

Certain information included in this press release has been
sourced from third parties. XL does not make any representations
regarding the accuracy, completeness or timeliness of such third
party information. Permission to cite such information has neither
been sought nor obtained.

Forward Looking Statements

This press release contains forward-looking statements, both with
respect to XL and Catlin and their industries, that reflect their
current views with respect to future events and financial
performance. Statements that are not historical facts, including
statements about XL's or Catlin's beliefs, plans or expectations, are
forward-looking statements. These statements are based on current
plans, estimates and expectations, all of which involve risk and
uncertainty. Statements that include the words "expect," "intend,"
"plan," "believe," "project," "anticipate," "may," "could" or "would"
or similar statements of a future or forward-looking nature identify
forward-looking statements. Actual results may differ materially from
those included in such forward-looking statements and therefore you
should not place undue reliance on them.

A non-exclusive list of the important factors that could cause
actual results to differ materially from those in such
forward-looking statements includes: (a) changes in the size of
claims relating to natural or man-made catastrophe losses due to the
preliminary nature of some reports and estimates of loss and damage
to date; (b) trends in rates for property and casualty insurance and
reinsurance; (c) the timely and full recoverability of reinsurance
placed by XL or Catlin with third parties, or other amounts due to XL
or Catlin; (d) changes in the projected amount of ceded reinsurance
recoverables and the ratings and credit worthiness of reinsurers; (e)
actual loss experience from insured or reinsured events and the
timing of claims payments being faster or the receipt of reinsurance
recoverables being slower than anticipated; (f) increased competition
on the basis of pricing, capacity, coverage terms or other factors
such as the increased inflow of third party capital into reinsurance
markets, which could harm either XL's or Catlin's ability to maintain
or increase its business volumes or profitability; (g) greater
frequency or severity of claims and loss activity than XL's or
Catlin's respective underwriting, reserving or investment practices
anticipate based on historical experience or industry data; (h)
changes in the global financial markets, including the effects of
inflation on XL's or Catlin's business, including on pricing and
reserving, increased government involvement or intervention in the
financial services industry and changes in interest rates, credit
spreads, foreign currency exchange rates and future volatility in the
world's credit, financial and capital markets that adversely affect
the performance and valuation of either XL's or Catlin's investments,
financing planning and access to such markets or general financial
condition; (i) changes in ratings, rating agency policies or
practices; (j) the potential for changes to methodologies,
estimations and assumptions that underlie the valuation of XL's or
Catlin's respective financial instruments that could result in
changes to investment valuations; (k) changes to XL's or Catlin's
respective assessment as to whether it is more likely than not that
it will be required to sell, or has the intent to sell,
available-for-sale debt securities before their anticipated recovery;
(l) the ability of XL's or Catlin's subsidiaries to pay dividends;
(m) the potential effect of legislative or regulatory developments in
the jurisdictions in which XL or Catlin operates, such as those that
could impact the financial markets or increase their respective
business costs and required capital levels, including but not limited
to changes in regulatory capital balances that must be maintained by
operating subsidiaries and governmental actions for the purpose of
stabilizing the financial markets; (n) the actual amount of new and
renewal business and acceptance of products and services, including
new products and services and the materialization of risks related to
such products and services; (o) changes in applicable tax laws, tax
treaties or tax regulations or the interpretation or enforcement
thereof; (p) the effects of mergers, acquisitions, divestitures and
retrocession agreements; and (q) in the case of XL, the other factors
set forth in XL's reports on Form 10-K, Form 10-Q and other documents
on file with the United States Securities and Exchange Commission.

Additionally, the acquisition of Catlin by XL (the "Acquisition")
is subject to risks and uncertainties, including: (i) XL and Catlin
may be unable to complete the Acquisition because, among other
reasons, conditions to the completion of the Acquisition may not be
satisfied or waived, including the failure to obtain required
regulatory approvals, or the other party may be entitled to terminate
the Acquisition; (ii) receipt of regulatory approvals required by the
Acquisition may be subject to conditions, limitations and
restrictions that could negatively impact the business and operations
of the combined company; (iii) uncertainty as to the timing of
completion of the Acquisition; (iv) the ability to obtain approval of
the Acquisition by Catlin shareholders; (v) uncertainty as to the
actual premium (if any) that will be realized by Catlin shareholders
in connection with the Acquisition; (vi) uncertainty as to the
long-term value of XL ordinary shares to be issued to Catlin
shareholders in connection with the Acquisition; (vii) inability to
retain key personnel of Catlin or XL during the pendency of the
Acquisition or after completion of the Acquisition; (viii) failure to
realize the potential synergies from the Acquisition, including as a
result of the failure, difficulty or delay in integrating Catlin's
businesses into XL; (ix) the ability of Catlin's board of directors
to withdraw its recommendation of the Acquisition; and (x) the
outcome of any legal proceedings to the extent initiated against XL,
Catlin and others relating to the Acquisition, as well as XL and
Catlin's management's responses to any of the aforementioned factors.

Neither Catlin nor XL undertakes any obligation to update publicly
or revise any forward-looking statement, whether as a result of new
information, future developments or otherwise.

Disclosure Requirements

Catlin is a Bermuda company and is therefore not subject to the
United Kingdom Takeover Code (the "Code"). Accordingly, shareholders
of Catlin and others dealing in Catlin shares are not obliged to
disclose any of their dealings under the provisions of the Code.
However, market participants are requested to make disclosures of
dealings as if the Code applied and as if Catlin were in an "offer
period" under the Code. Catlin shareholders and persons considering
the acquisition or disposal of any interest in Catlin shares are
reminded that they are subject to the Disclosure and Transparency
Rules made by the UK Listing Authority and other applicable
regulatory rules regarding transactions in Catlin shares.

Catlin's website contains the form of disclosure requested. If you
are in any doubt as to whether or not you should disclose dealings,
you should contact an independent financial adviser authorized by the
UK Financial Conduct Authority under the UK Financial Services and
Markets Act 2000 (or, if you are resident in a jurisdiction other
than the U.K., a financial adviser authorized under the laws of such
jurisdiction).

In light of the foregoing, as provided in Rule 8.3(a) of the Code,
any person who is "interested" in one percent or more of any class of
"relevant securities" of Catlin or of any "securities exchange
offeror" (being any "offeror" other than an "offeror" in respect of
which it has been announced that its "offer" is, or is likely to be,
solely in "cash") should have made an "opening position disclosure"
following the commencement of the "offer period" which began when the
possible offer announcement was released on December 17, 2014.

An "opening position disclosure" should contain details of the
person's interests and short positions in, and rights to subscribe
for, any "relevant securities" of each of (i) Catlin and (ii) any
"securities exchange offeror(s)". Persons to whom Rule 8.3(a) would
have applied had the Code been applicable should have made an
"opening position disclosure" by no later than 3:30 p.m. (London
time) on the tenth "business day" following the commencement of the
"offer period" which began when the possible offer announcement was
released on December 17, 2014. Relevant persons who undertake
"dealings" in the "relevant securities" of Catlin or of a "securities
exchange offeror" prior to the deadline for making an "opening
position disclosure" should instead make a "dealing disclosure".

Rule 8.3(b) of the Code provides that if any person is, or becomes
"interested" (directly or indirectly) in one percent or more of any
class of "relevant securities" of an offeree or of any "securities
exchange offeror", all "dealings" in any "relevant securities" of
that offeree or of any "securities exchange offeror" (including by
means of an option in respect of, or a derivative referenced to, any
such "relevant securities") should be publicly disclosed in a
"dealing disclosure" by no later than 3:30 p.m. (London time) on the
"business day" following the date of the relevant transaction. In a
situation where the Code applies, this requirement would continue
until the date on which any "offer" becomes, or is declared,
unconditional as to acceptances, lapses or is otherwise withdrawn or
on which the "offer period" otherwise ends. Under Rule 8 of the Code,
a "dealing disclosure" would contain details of the "dealing"
concerned and of the person's interests and short positions in, and
rights to subscribe for, any "relevant securities" of (i) Catlin and
(ii) any "securities exchange offeror", save to the extent that these
details have previously been disclosed under Rule 8.

Accordingly, in the case of both an opening position disclosure
and "dealing disclosure" (if any), disclosures of interests in the
shares of each of XL and Catlin should be made.

If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an "interest"
in "relevant securities" of Catlin or a "securities exchange
offeror", they would, if the Code were applicable, be deemed to be a
single person for the purpose of Rule 8.3 of the Code.

Consistent with the provisions of Rule 8.1 of the Code, "opening
position disclosures" should be made by Catlin and by any "offeror",
and all "dealings" in "relevant securities" of Catlin by Catlin, by
any "offeror" or by any persons "acting in concert" with any of them,
should be disclosed in a "dealing disclosure" by no later than 12:00
p.m. (London time) on the "business day" following the date of the
relevant transaction.

"Interests in securities" arise, in summary, when a person has
long economic exposure, whether conditional or absolute, to changes
in the price of "securities". In particular, a person will be treated
as having an "interest" by virtue of the ownership or control of
"securities", or by virtue of any option in respect of, or derivative
referenced to, "securities".

Terms in quotation marks are defined in the Code, which can be
found on the UK Takeover Panel's website. If you are in any doubt as
to whether or not you should disclose a "dealing" by reference to the
above, you should contact an independent financial adviser authorized
by the UK Financial Conduct Authority under the UK Financial Services
and Markets Act 2000.

Total Shares in Issue

Catlin confirms that as at the close of business on January 8,
2015, being the latest practicable date prior to the date of this
announcement, it had 362,570,229 common shares in issue and admitted
to trading on the Main Market of the London Stock Exchange under ISIN
reference BMG196F11004.

XL confirms that as at the close of business on January 8, 2015,
being the latest practicable date prior to the date of this
announcement, it had 255,178,939 ordinary shares in issue and
admitted to trading on the New York Stock Exchange under ISIN
reference IE00B5LRLL25.


Contact:

David Radulski
Investor Relations
[phone]

Elliott Bundy
Media Relations
[phone]

Sard Verbinnen & Co

New York: Drew Brown /Chris Kittredge
[phone]

London: Jonathan Doorley/Jennifer Stroud
[phone]


ots Originaltext: XL Group Plc
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