The Hartford acquires Navigators for $2.1bn in cash

US-based Hartford Financial Services Group has entered into a definitive agreement to acquire global specialty insurance holding The Navigators Group in an all-cash transaction of approximately $2.1 billion.

The transaction has been approved by Navigators’ board of directors and is expected to close in the first half of 2019 following the receipt of regulatory and stockholder approvals. The deal is set to expand Hartford's offerings and underwriting risk appetite.

“This transaction will result in the realization of significant value for our stockholders,” said Stanley Galanski, Navigators president and chief executive officer. “It is a testament to the caliber and dedication of our people and the strength of our underwriting culture.”

Under the agreement, Navigators stockholders will receive $70.00 per share in cash upon the closing of the transaction. The $70.00 per share offer price represents a multiple of 1.78 times Navigators’ fully diluted tangible book value per share as of June 30, 2018 and an 18.6 percent premium to the 90-trading-day average stock price.

“We look forward to bringing Navigators’ specialty lines capabilities to The Hartford, an organization that shares our commitment to underwriting excellence, attracting and retaining top talent, and delivering exceptional customer experiences," Galanski said. “Joining The Hartford and leveraging the strength of its balance sheet and quality of its core commercial insurance products, we will create exciting opportunities to deliver enhanced value to our brokers and policyholders.”

Navigators said it expects to continue paying regular quarterly dividends consistent with past practice prior to closing. Completion of the transaction is not subject to any financing conditions.

Navigators’ founder, and shares controlled by other members of his family, which represent approximately 20 percent of total shares outstanding, have agreed to vote in support of the transaction.

The Hartford’s chairman and CEO Christopher Swift, commented: “We are excited to announce the acquisition of Navigators, which we are confident will achieve key strategic and financial objectives for The Hartford. It expands our product offerings and geographic reach, and adds tenured and proven underwriting and industry talent while strengthening our value proposition to agents and customers. We are optimistic about our combined growth opportunities and expect the acquisition to generate attractive returns.”

According to the company, the agreement includes a “go-shop” provision designed to afford an opportunity for other potential acquirers to determine whether they are interested in proposing to acquire Navigators. Accordingly, for 30 days Navigators will have an opportunity to solicit competing acquisition proposals. If the board of directors accepts a competing proposal during the “go-shop” period that The Hartford does not match, the successful competing bidder would pay a termination fee to The Hartford.