With the news this morning that The Hartford has inked a deal to acquire Navigators, another Lloyd’s business could find itself in the hands of an international insurance giant.

So far this year, Axa has taken XL’s circa $3.1bn Lloyd’s books, AIG has bagged Validus’ Talbot and now The Hartford is set to gain Navigators’ Lloyd’s Syndicate 1221.

The Hartford’s move into the London market through the Navigators platform marks the conclusion of the carrier’s search to acquire a specialty (re)insurer.

The US giant is understood to have made it through the initial bidding rounds to acquire up-for-sale Aspen, which is now thought to be close to a deal with Apollo, and it was also thought to have shown interest in XL before its $15.3bn takeover by Axa.

Date announcedTargetAcquirerSumValue to tangible book value
Aug-18 Navigators The Hartford $2.1bn 1.78x
Mar-18 XL Group AXA $15.3bn 1.93x
Jan-18 Validus AIG $5.6bn 1.77x
Dec-16 Allied World Fairfax $4.9bn 1.56x
Dec-16 Ironshore Liberty Mutual $3bn 1.45x
Oct-16 Endurance SOMPO $6.3bn 1.53x
Aug-15 PartnerRe Exor $6.9bn 1.53x
Jul-15 Sirius International CM International $2.25bn 1.27x  
Jun-15 HCC Tokio Marine $7.5bn 1.9x
May-15 Ironshore Fosun $2.3bn 1.26x
Mar-15 Montpelier Re Endurance $1.8bn 1.21x
Source: re-insurance.com data; company announcements; JP Morgan    

In a presentation explaining the deal, The Hartford said that Navigators Syndicate will support its growth plans in specialty lines as well as expand its presence in China through the Lloyd’s platform there.

It singled out marine – with the class making up 39 percent of Navigator’s $493mn international book – as one of the jewels in the crown in the takeover.

The majority of Navigator’s marine book premium – which includes marine liability, specie, cargo and transport – is written through Lloyd’s.

Discussing the Navigators business on a call with investors, The Hartford’s CEO Christopher Swift said: “I think what’s particularly attractive to me is some of the international capabilities that we pick up through their Lloyd’s presence, their larger London market presence and a beginning of a European strategy.

“So, The Hartford’s vision and strategies focused around small to middle market in select specialties and select activities and national accounts,” he said according to a transcript from S&P.

The takeover comes at a time when the Corporation is cracking down on various marine classes and threatening to shut down syndicates that consistently fail to turn a profit.

Syndicate 1221 reported a combined ratio of 106 percent and a loss of £7.8mn in 2017, a year marred by a trio of Atlantic hurricanes and wildfires that scorched swathes of California. The result marked a deterioration on the £12mn profit the syndicate reported in 2016 when it clocked a 99.8 percent combined ratio.

As Lloyd’s businesses face increasing pressure after a dismal 2017 that was plagued by catastrophe losses and a spiralling expense ratio – those acquiring syndicates must be weighing the pros and the cons of gaining access to the market as a source of specialty business.