Spring 2014 Bermuda Re/insurance+ILS 9
M&A: a case study – Markel
Jeremy Brazil Markel International
Following its high profile acquisition of Alterra in May 2013, Markel
International found itself with two Lloyd’s syndicates. The question was which elements would it retain and how would the two increasingly integrated components work together going forward. As Brazil explained, one of the first steps Markel took was to bring both teams under one roof, with the combined line-up moving into the Markel building in August. This helped to bring mind and management into one place and has guided the new entity towards integration.
Markel has been obliged to consider areas of both consolidation and
growth within its strengthened Lloyd’s offering as a result of its acquisition of Alterra. Its recent exit of aviation is a case in point, with Markel walking away from the class as not a strong fit with the wider Markel book. Markel has also sought to avoid duplication of its efforts and a “few difficult decisions were made regarding what people we needed to take the business forward and what lines we were going to stay with”, said Brazil.
“Alterra was looking to diversify its book in recent years, so they had
some people who had only joined the company a matter of months before the acquisition. We accommodated that business where we could, but a lot of it was fairly nascent so that’s been subsumed into existing divisions”, said Brazil.
He said that Markel considered Alterra’s Lloyd’s business and decided
to retain and concentrate upon three key lines. Property treaty was the first, “which was in the whole very similar to the business we wrote and the way that we wrote it, so that was pretty straightforward”. Brazil said that the acquisition gave the combined firm the opportunity
“It is complementary to our existing portfolio. What is good is that the whole underwriting ethos and our strategies are similar.”
to combine line sizes and write a bigger share of Lloyd’s property treaty business going forward.
The second line that was a strong fit with Markel’s existing business
was Alterra’s financial institutions team. “We already had a lot of time and respect for their team, so it was great to bring them within the company”. He said that Markel had previously had a financial institutions team of one or two underwriters which wrote a “relatively modest account”, but that the team has since more than doubled in size. “It is business we like and much of it is complementary to our existing portfolio. What is good is that the whole underwriting ethos and our strategies are similar”; meaning that there is no dramatic change in culture or approach.
“The third area is the development of our accident and health treaty
account, which Alterra wrote out of their offices in Zurich”, said Brazil. Again, it is about drawing upon an international talent pool to strengthen Markel’s position at Lloyd’s, he said. Brazil added that Markel is keen to develop these three core elements, which will further bolster its London proposition.
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