UK Insurer Aviva to Enter Lloyd’s Market via Acquisition of Probitas for £242M

Aviva plc announced it will acquire 100% of Probitas Holdings (Bermuda) Ltd., the parent company of the Probitas Group, for a minimum fixed consideration of £242 million (US$306.2 million).

The transaction includes Probitas Managing Agency, which is the managing agent of Lloyd’s Syndicate 1492, the corporate member Probitas Corporate Capital Ltd. and all other subsidiaries.

“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,” commented Amanda Blanc, group chief executive officer of Aviva.

The acquisition significantly expands the market opportunity for Aviva’s Global Corporate & Specialty (GCS) business, said Aviva.

Subject to regulatory approval, Aviva’s intention is to provide additional capital to sustain Syndicate 1492’s strong growth trajectory and increase the share of underwriting profits that are retained within the Probitas group.

The Lloyd’s market represents a major source of untapped growth for Aviva, offering access to significant in-appetite premium volumes, international licenses and broader distribution networks. It will also allow Aviva to capitalize on its existing underwriting capabilities, broker relationships and capital base, Aviva said.

Launched in 2015, Probitas is a top performer within the Lloyd’s market, Aviva said, noting that Syndicate 1492 reported gross written premium (GWP) of £288 million (US$364.4 million) in 2023 and has delivered a 21% compound annual growth rate (CAGR) since 2019.

During this period, the business has consistently been a top performer within its Lloyd’s peer group, achieving an average combined ratio of 82%. Strong growth is expected to continue during 2024, driven by favorable pricing trends, new product lines and expanded local distribution in key markets.

Probitas’s management team will continue to run the business post-acquisition and the Probitas brand will remain in use. “Aviva’s ambition is to preserve the business’ unique, agile culture and empower the management team to focus on delivering profitable growth,” Aviva said.

The acquisition price is equivalent to circa 7x estimated 2026 post-tax IFRS operating profit and the transaction is expected to deliver a high-teens internal rate of return (IRR). The estimated impact on the group’s Solvency II shareholder cover ratio would have been a reduction of circa 3 percentage points as at Dec. 31, 2023.

The transaction is subject to customary closing conditions including regulatory approvals and is expected to close in mid-2024.

“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,” said Jason Storah, chief executive officer of Aviva UK & Ireland General Insurance.

“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,” Storah added.

“As Probitas embarks on the next stage of its evolution, it was important to find a partner with the financial strength and commitment to enable Probitas to optimize its potential and ambition to significantly scale up and diversify the business and take advantage of a unique opportunity to build one of the most successful and profitable franchises in the Lloyd’s market,” according to Ash Bathia, chief executive officer of Probitas.

“I am convinced that Aviva is an ideal partner, and I am truly excited about being part of the Aviva Group and the opportunities ahead for our business and staff,” Bathia continued.

Source: Aviva

Topics Mergers & Acquisitions Carriers Excess Surplus New Markets Lloyd's