Catlin/Wellington Finalize Share Offer; Merger to Create Lloyd’s Largest Underwriter

October 30, 2006

The Boards of Directors of Catlin Group Limited and Wellington Underwriting Plc have agreed on the terms of a recommended Offer to be made by Catlin for the whole of the issued and to be issued share capital of Wellington. Both companies announced the acceptance of the finalized offer, which is not for distribution or publication in The U.S., Canada, Australia or other jurisdictions where prohibited.

Catlin gave the following details of the of the proposed offer, as follows:
— Wellington Shareholders to receive 0.17 New Catlin Shares and 35 pence [66.5 U.S. cents] in cash for each Wellington Share. A Mix and Match Facility will also be available
— Offer values each Wellington Share at approximately 121 pence [$2.297] and the existing issued share capital of Wellington at £591 million [$1.122 billion], based on the closing middle market price of Catlin on 27 October 2006, being the last Business Day prior to this Announcement
— Offer represents a premium for Wellington Shareholders of approximately 25 percent to the closing middle market price of Wellington on 23 October 2006, being the last Business Day prior to the announcement that Catlin and Wellington were in discussions
— Offer also represents a premium for Wellington Shareholders of approximately 31 per cent. to the average Wellington Share price over the one month period prior to 24 October 2006, being the Business Day of the announcement that Catlin and Wellington were in discussions
— Wellington Shareholders will own approximately 34 percent of the Enlarged Group. The Offer has been structured to enable Wellington Shareholders to enjoy the benefits that will flow from the transaction as continuing shareholders in the Enlarged Group
— Acquisition will create a major international specialty property and casualty insurer with gross premiums of approximately $2.4 billion and a pro forma market capitalization of approximately £1.3 billion [$2.468 billion].
— Catlin will become the largest underwriting operation at Lloyd’s, will be a leading player in Bermuda and will have a strong platform to accelerate the development of its US business
— Stephen Catlin will be CEO of the Enlarged Group; key Wellington executives will be an integral part of the Enlarged Group’s management team
— Catlin’s total 2006 dividend is expected to be increased to 23 pence a share. Represents full year increase of 48 percent for Catlin Shareholders; rebased Catlin dividend will also provide significant income uplift to Wellington Shareholders – implied pro forma uplift of 37 per cent. on 2005 dividend
— Acquisition expected to be earnings neutral in 2007 (after restructuring charges) and significantly earnings enhancing in 2008 and beyond1. Expected post-tax synergies from the combination of $70 million, to be achieved in full by 2008.
— Application to be made to Lloyd’s by Wellington for permission to cease Syndicate 2020 with effect from 31 December 2006, with the capital provided by Wellington Corporate Members to that syndicate being made available to support Catlin’s Syndicate 2003 for the 2007 year of account. Compensation will be paid to unaligned members for the cessation of Syndicate 2020 if the Cessation Application is approved. The Cessation Application is expected to be determined by early December 2006.

Catlin said the “Offer will be implemented by way of a recommended offer by Catlin for Wellington and will be conditional on, inter alia, the approval of Catlin Shareholders and the satisfaction of relevant regulatory conditions. The Board of Catlin intends unanimously to recommend that Catlin Shareholders vote in favor of the Acquisition at the Special General Meeting and the Board of Wellington intends unanimously to recommend that Wellington Shareholders accept the Offer. Wellington’s Directors have given Catlin irrevocable undertakings to accept the Offer in respect of their own Wellington Shares. The Acquisition is expected to complete by 31 December 2006.”

Stephen Catlin, The Group’s Chief Executive commented: “The combination of our two complementary businesses will create substantial value for both Catlin and Wellington shareholders. In London, the enlarged syndicate will be the largest at Lloyd’s in terms of stamp capacity with substantial strength across key sectors of the market.

“In the US, our operations form a natural fit and the Acquisition will accelerate our announced US expansion. At the same time, we have identified substantial synergies in reinsurance, tax, operations and investments, which will benefit earnings in 2008 and beyond. The combination further diversifies our underwriting portfolio, fulfilling our objective of seeking uncorrelated risk. We look forward to the opportunities that this expansion will bring.”

Wellington’s Chief Executive Preben Prebensen noted: “The combination with Catlin accelerates Wellington’s planned entry into the Bermuda market and facilitates a restructuring of our relationship with third party capital providers without recourse to shareholders, whilst at the same time creating a group with the scale, diversity and depth of talent to compete on a global stage.”

John Barton, Chairman of Wellington, added: “We believe that the Offer is attractive for Wellington Shareholders. Having carefully considered the proposed Offer terms and the plans for the Enlarged Group, we are confident that the Offer will deliver more certain and greater value to Wellington Shareholders than our stand-alone strategic plans.”

A presentation to analysts will be held today, October 30, at 09:00 AM at Catlin’s London offices (3 Minster Court, Mincing Lane, London EC3R 7DD). A copy of the presentation will be available on www.catlin.com in due course.

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