XL Group Plc Chief Executive Officer Mike McGavick said that while he shuns casinos unless he’s with his mother-in-law, he’s felt lately like he was sitting at a “high stakes table” as he made insurance deals.
McGavick announced a plan in December to sell a stake in a home insurer to Progressive Corp. then reached an agreement the next month to buy Catlin Group Ltd. for about $4 billion. Transactions in the reinsurance and specialty-coverage industries are accelerating to create companies that can withstand pressure from new rivals.
The reinsurance “sector is littered with roadkill, and yet it seems new entrants are getting on the road every day,” McGavick said in an annual letter to shareholders, posted on the Dublin-based company’s website. “We are delighted to have been among those who led the way and took the patient time to identify a winning combination before the rush.”
Hedge funds and pensions have been entering the industry seeking weather-related risks that aren’t correlated to financial markets. Amid the competition, Endurance Specialty Holdings Ltd. announced an agreement to buy Montpelier Re Holdings Ltd. In February, Brit Plc said it was selling itself to Fairfax Financial Holdings Ltd.
“Gambling is not high on my list of voluntary activities,” McGavick said. “But, since my mother-in-Law has often been the organizer of bus trips to casinos, I have been around it from time to time. And this year, it is fair to say, we at XL voluntarily chose a couple of high-risk maneuvers.”