Insurance majors IPC Holdings and Max Capital agree to merge

Property casualty reinsurer IPC Holdings Ltd is acquiring Max Capital Group Ltd, a specialty insurer and reinsurer, for about $912 million in stock to create a stronger capitalised insurance company.

Under the deal, Max shareholders will receive 0.6429 IPC shares for each Max share, the companies said in a joint statement. With IPC's Friday closing price of $25.41 on NASDAQ, the offer values Max at about $16.34 a share. This is slightly below Max's Friday closing of $16.50 on NASDAQ.

The combined entity, which will operate under the name of Max Capital Group Ltd., will be a stronger capitalized company, with shareholders' equity of over $3 billion and total assets of approximately $10 billion, according to a joint statement.

Max CEO Marston Becker will run the combined company, which will be 58 per cent owned by IPC shareholders and retain the Max Capital Group name, the companies said in a statement. IPC CEO Jim Bryce will retire as of 30 June, although he will continue in a non-executive role as chairman of Max IPC Re, IPC and Max's renamed reinsurance platform.

Peter Minton, Max's chief operating officer, and Joe Roberts, Max's chief financial officer will hold their respective titles at Max Capital Group and IPC's CFO, John Weale, will become executive vice president and treasurer of the combined entity.

Completion of the transaction is contingent upon customary closing conditions, including the approvals of shareholders and various regulatory approvals and notices. The transaction is expected to close in the third quarter of 2009.

"IPC and Max have complementary businesses with very little overlap ... We expect that the combined entity will have less volatile underwriting results than either of its individual components, as well as more flexibility to efficiently manage capital," Max CEO Becker and IPC CEO Bryce said.