UK-domiciled insurer Aviva Plc will acquire 100% of Probitas Holdings (Bermuda) Limited, the ultimate holding company of the Probitas Group, for a minimum fixed consideration of £242 million, marking the firm’s entry into the Lloyd’s market.
The transaction includes the acquisition of Probitas’s fully integrated Lloyd’s platform, encompassing its Corporate Member, Managing Agent, international distribution entities and tenancy rights to Syndicate 1492.
Aviva says that the deal significantly expands the market opportunity for its Global Corporate & Specialty (GCS) business, which is a key pillar of the firm’s UK General Insurance (GI) business and is a strategic growth segment for the Aviva Group.
According to the firm, the Lloyd’s market represents a major source of untapped growth, offering access to significant in-appetite premium volumes, international licences and broader distribution networks, while allowing the company to capitalise on its existing underwriting capabilities, broker relationships and capital base.
Amanda Blanc, Group Chief Executive Officer (CEO) of Aviva, said: “This acquisition is another step in our strategy to invest in Aviva’s future profitable growth. Aviva’s presence in the Lloyd’s market opens up new opportunities to accelerate growth in our capital-light General Insurance business.”
Established in October 2015, Probitas has grown into one of the best-performing Lloyd’s businesses, with 2021, 2022 and 2023 GAAP net combined ratios of 78.7%, 78.6% and 79.8%, respectively.
Syndicate 1492 reported gross written premium (GWP) of £288 million in 2023 and has delivered a 21% compound annual growth rate (CAGR) since 2019. The 2024 year of account GWP of Syndicate 1492 is projected to be around £400 million, written across underwriting platforms in London, Manchester, Australia, Europe, Mexico, and Canada.
Given Probitas’s focus on specialty lines, the transaction represents a unique opportunity for Aviva to enter the Lloyd’s market via a business that is well-aligned with its strategy in terms of product, geography and risk profile.
Ash Bathia, CEO, Probitas, commented: “I’m delighted to announce this deal today because Aviva is the ideal partner for Probitas going forward and I’m truly excited about the combined opportunities ahead for our business and staff. The success of Probitas is built on solid foundations; a fantastic team of people, rigorous underwriting discipline, market-leading actuarial and analytics capability and a broad distribution network, all underpinned by a strong set of values and corporate culture.
“As Probitas embarks on the next stage of its evolution it was important to find a partner with the financial strength and ambition to allow us to increase our share of the vast global specialty business by using our extensive Lloyd’s licences combined with Aviva’s brand strength, scale and distribution reach.”
Once the deal closes, which is expected in mid-2024, Probitas’s management team will continue to run the business and the Probitas brand will remain in use.
Aviva explains that it plans to provide additional capital to the Corporate Member in order to sustain Syndicate 1492’s strong growth trajectory and increase the share of underwriting profits that are retained within the group.
The acquisition price of £242 million is equivalent to c.7x estimated 2026 post-tax IFRS operating profit and the transaction is expected to deliver a high-teens internal rate of return (IRR).
Jason Storah, Chief Executive Officer, Aviva UK & Ireland General Insurance, said: “This is a fantastic opportunity for both Aviva and Probitas. The Probitas track record, technical expertise and high-quality team will be an excellent addition to Aviva. They will continue to run the business post-acquisition and the Probitas brand will remain. We want to preserve their unique, agile culture and support the team to focus on delivering profitable growth that will benefit from leveraging Aviva’s own scale and capabilities.”
This transaction sees Aviva acquire Saudi Re’s 49.9% stake in Probitas for £120 million, which remains subject to closing conditions, including regulatory approvals from relevant authorities.
Fahad Al-Hesni, Managing Director and CEO, Saudi Re, commented: “We believe the transaction will enable Saudi Re to strengthen its competitive position and reorient our financial resources towards new growth opportunities domestically and internationally.”
Al-Hesni added the transaction was agreed on terms very attractive to Saudi Re and created a substantial shareholder value, generating nearly five times the return on the initial investment.
