Amlin snaps up Fortis arm in expansion

AMLIN, the insurer that trades on the Lloyd&rsquo;s of London market, said yesterday it wants to raise &pound;76m from markets to fund a buyout of a non-life insurance arm of part-nationalised Dutch bank Fortis.<br /><br />The group said it has struck a &euro;350m (&pound;303m) deal to buy Fortis Corporate Insurance (FCI) from the Dutch government, which took control of it when it nationalised Fortis&rsquo; domestic operations. <br /><br />Amlin will finance the ambitious bid partly by selling 23.5m of new shares &ndash; equivalent to five per cent of its current shares in issue &ndash; to institutional investors at roughly 339p each. <br /><br />Chief executive Charles Philips said: &ldquo;We&rsquo;re confident that FCI is returning to profitability and going forward will generate good returns for Amlin.&rdquo;<br /><br />Shares of Amlin fell five per cent in early trading after Philips&rsquo; announcement, but then pared gains to close 0.74 per cent up at 341.5p after analysts were generally satisfied the deal will pay off. <br /><br />Credit Suisse analyst Merryleas Hyde said overall the acquisition &ldquo;appears to make strategic sense in that it gives Amlin a further platform for expansion in Europe&rdquo;.<br /><br />RBS analyst Joanna Parsons said the fit between the firms looks good &ldquo;with synergy benefits from reinsurance savings and back office functions&rdquo;.<br /><br />&ldquo;The timing also looks good, as rates for marine start to harden and European property and liability rates stabilise,&rdquo; added Parsons. <br /><br />She also earnings from the acquisition should begin to accrue from 2010. <br /><br />FCI specialises in marine, property, liability and fleet motor insurance, and recently launched an operation in France.<br /><br />It made a pre-tax loss of &euro;38m (&pound;33m) in 2008, like most other similar firms, due to the falling value of investments and large claims.