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Zurich Insurance has reached an agreement on “key terms” of an £8bn takeover offer for Beazley after the Swiss group sweetened its bid for the FTSE 100 insurer.
In a statement on Wednesday, the companies said Zurich had raised its offer to £13.10 a share, up from the £12.80 rejected by Beazley’s board last month.
Beazley would be expected to pay its shareholders a dividend of up to 25p, implying a total value of up to £13.35, according to the statement.
Beazley, an insurer at the Lloyd’s of London market specialising in cyber attacks, said its board would recommend a deal to shareholders if Zurich made a firm offer on the terms set out by the companies on Wednesday.
Shares jumped almost 9 per cent in early London trading to £12.62.
The Swiss insurer went public with its interest in Beazley last month after making several previously undisclosed approaches.
Zurich chief executive Mario Greco told the FT last month that acquiring Beazley would help it expand in sought-after segments of the specialty insurance market, including risks related to construction, energy, cyber, shipping and aviation.
Zurich had reinsured the construction of more than 200 data centres and anticipated more demand, he said, owing to the appetite for AI infrastructure.
“We are strong where they are trying to grow,” Greco said last month of Beazley, pointing to Zurich’s strength in infrastructure construction insurance.
Greco added that part of Beazley’s appeal was that it would give the Swiss group immediate access to Lloyd’s. In recent years, it has lured back large insurers that had left the market as well as private capital groups supplying funds for reinsurance transactions.
Zurich was separately in talks with Lloyd’s about setting up a syndicate at the market, Greco said last month, providing another avenue in if its takeover bid for Beazley was rejected.
Beazley, which was founded in 1986 during a period of crisis in commercial insurance, has emerged as a well-known brand covering cyber perils such as hacking and ransomware attacks.
In an interview with the FT last month, Beazley chief executive Adrian Cox said a specialty insurance business needed to be run slightly differently to a property and casualty business, which Zurich recognised.
Private capital groups are increasingly vying with traditional reinsurance houses such as Munich Re to finance insurance transactions.
New York’s Blackstone has set up multiple Lloyd’s syndicates with insurer AIG, while Oaktree — the credit investor majority owned by Canada’s Brookfield — recently set up a new Lloyd’s syndicate with Allianz.
“You can do deals on the Lloyd’s platform where you access private capital, which is different from capital offered by the reinsurance companies,” Greco told the FT.
Speciality insurance and reinsurance companies have enjoyed elevated profits since raising prices in early 2023. Prices are now beginning to fall as more capital chases a limited supply of risks in the sector.
