Yahoo Finance Lloyd's Insurer Cathedral Begins £250m Sale
One of the top-performing underwriters in the Lloyd's of London insurance market is being put up for sale.
Sky News has learnt that Cathedral Capital, which is majority-owned by Alchemy, the private equity group, is expected to command a price tag of more than £250m.
The decision to put the business up for sale comes seven years after Alchemy invested in the Lloyd's name and should see the investment house reap a return of at least two-and-a-half times its original outlay.
Cathedral, which employs just over 100 people, is rated in the top five of more than 90 Lloyd's syndicates by underwriting performance, with an average net loss ratio of just 60% since 2004.
Even at the upper end of a £250m-£300m price range which Cathedral is likely to fetch, a buyer will only be required to pay a fraction of the price of buying into comparably-performing businesses such as Amlin (LSE: AML.L - news) and Beazley (LSE: BEZ.L - news) .
Its management team, which has decades of experience in the market, is led by Peter Scales, chief executive, and John Lynch, chief financial officer, and John Hamblin, chief underwriting officer. The collective owners of roughly 40% of the business, they are understood to be willing to remain in their roles under a new owner.
Insiders suggested that Cathedral was likely to attract interest from trade buyers, private equity groups and pension funds, which have accelerated their deployment of capital in the insurance industry in recent times.
Cathedral will be one of the largest Lloyd's syndicates to have come up for sale for some time. A flurry of mergers and takeovers in the world's oldest reinsurance market during the last three years saw Brit Insurance taken over by Apollo Management and CVC Capital Partners, two big buyout firms.
Other attempted deals, including a takeover of Hardy Underwriting by FTSE-250 rival Beazley, fell by the wayside. Hardy was subsequently acquired by the US insurer CNA Financial.
The Lloyd's market has faced a challenging few months, with Superstorm Sandy in the US last year costing Beazley alone approximately $90m (£58.8m).
The sinking of the Costa Concordia provided another of 2012's key moments for some Lloyd's underwriters.
Kinmont Advisory and Willis Capital Markets & Advisory are handling the auction process on behalf of Cathedral's shareholders. Other firms which pitched for the sale mandate were informed today that they had been unsuccessful.
Cathedral was unavailable for comment.
