Navigators Group (NAVG) Widens European Presence With Buyout

The Navigators Group, Inc. NAVG recently closed the buyout of Bracht, Deckers & Mackelbert NV (BDM) as well as its affiliated insurance company, Assurances Continentales – Continentale Verzekeringen NV (ASCO). The insurer paid €35 million ($41.1 million) in cash as purchase consideration. The International Insurance segment of Navigators Group is likely to be benefited from this buyout owing to the strengthening of its foothold in Continental Europe.

The acquisition was announced on Dec 18, 2017. This apart, the Zacks Rank #2 (Buy) property and casualty (P&C) insurer bought all the shares of Canal Re SA, a Luxembourg reinsurance company and the wholly-owned subsidiary of ASCO. Both BDM and ASCO are based in Antwerp, Belgium.

As part of Navigator Group’s diversification strategy, the acquisition will help the insurer extend its solid specialty insurance expertise and insurance products to more brokers and insureds across Europe. The transaction acts as an important step for the P&C insurer to consolidate its presence in the European market, which is vital to the insurer’s international growth strategy. The consolidation will brace Navigators Group with a comprehensive solution for the insurer to serve its clients more efficiently post Brexit. Additionally, the transaction will allow BDM and ASCO to offer their strong experience to a much wider European market.

On completion of the integration, Navigators Group is likely to get a more scalable platform, which will provide a cushion to its product lines apart from expanding its geographies across the continental Europe. Moreover, with the wrapping up of the transaction, Navigators Group might combine its European underwriting operations with that of BDM while Antwerp could act as the hub for continental Europe. The acquisition is likely to substantially improve growth potential for both companies.  

Navigators Group along with BDM and ASCO shares the same culture, which focus on underwriting discipline and excellent claims experiences. The association will help BDM and ASCO provide its clients with a much broader portfolio of specialty insurance products and an improved technical and industry expertise.

Share Price Movement

Shares of the company have rallied 25.3% year to date, outperforming the industry’s slip of 0.8%. We expect operational efficiency across all segments, strategic initiatives like the aforementioned acquisition and a solid capital position to drive the shares higher in the near term.

 

Other Acquisitions in the Insurance Space

We have observed insurers adopting the inorganic route to brace their portfolio. The insurance industry is drawing attention of late with a series of acquisitions riding on its available capital resource, which remains at an all-time high.

Recently, Brown & Brown, Inc. BRO completed the buyout of Servco Pacific Insurance operations in Hawaii and the Pacific Northwest.

Further, Alleghany Capital Corporation, a wholly-owned subsidiary of Alleghany Corporation Y, informed that its unit Jazwares, LLC purchased Russ Berrie and Applause brands. Also, Arthur J. Gallagher & Co. AJG bought Thomas Costello Insurance Agency, Inc. of late.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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