Insurer Aviva has struck a £242 million deal that will see it return to the Lloyd’s of London specialist insurance market for the first time in more than two decades.
Aviva has agreed to buy Probitas, which provides insurance ranging from professional liability to property catastrophe cover, to boost its global corporate and speciality business.
The deal will see Aviva take on the rights to Syndicate 1492, one of the underwriting units in the Lloyd’s of London, giving the company a route back into the insurance market.
Aviva, then known as Norwich Union, exited the Lloyd’s market in 2000 after the group merged with CGU, with management at the time saying the business wanted to shift its strategy towards insurance in personal lines and for small businesses.
Amanda Blanc, chief executive at Aviva, said the firm’s presence in the Lloyd’s market “opens up new opportunities to accelerate growth in our capital-light general insurance business”.
The group added: “The Lloyd’s market represents a major source of untapped growth for Aviva, offering access to significant in-appetite premium volumes, international licences and broader distribution networks.
“Given Probitas’s focus on speciality lines, the transaction represents a unique opportunity for Aviva to enter the Lloyd’s market via a business that is well-aligned with Aviva’s strategy in terms of product, geography and risk profile.”
Probitas will keep its management team and brand after the deal, with Aviva saying it plans to pump in extra capital to the unit.
Ash Bathia, chief executive of Probitas, said: “It was important to find a partner with the financial strength and commitment to enable Probitas to optimise 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.
“I am convinced that Aviva is an ideal partner.”
Probitas reported a gross written premium of £288 million last year and has grown this performance measure by more than a fifth (21%) every year since 2019.
The deal is set to close in mid-2024.
Jefferies analysts said they were “pleasantly surprised by how good a strategic fit it is for the group”.
They said: “With 28% of premiums coming from the UK and a further 19% coming from Canada, nearly half of the business is well aligned to Aviva’s existing footprint.
“As well as raising the prospect of synergies, this also gives Aviva the ability to offer cover to clients directly, or via Lloyd’s paper.”
It follows a raft of recent acquisitions for Aviva, including the deal last November to buy Canadian vehicle insurer Optiom O2 for about £100 million, while it also last year splashed out £460 million to buy AIG’s UK protection business for about £460 million.
Before this, Aviva had been scaling back its business for years under a plan led by Ms Blanc to focus on three key markets: the UK, Ireland and Canada.