Potentially $60m of cost savings in Montpelier Re acquisition

The acquisition of Montpelier Re could mean that Endurance will generate substantial annual cost synergies of more than $60 million.

On a call with analysts, Endurance said that it also expects non-recurring integration related costs of $50 million.

The Bermudian reinsurer’s chief financial officer, Mike McGuire, explained that the company has benefitted from performing due diligence over the last couple of months.

He added that Endurance now has a good understanding of Montpelier Re’s corporate structure and organisation, saying that there would be significant areas of overlap that the company be looking to rationalise as part of the combination.

“There are areas that are new and additive, but equally there are very strong opportunities for us to combine and rationalise expense bases of the combined organisation,” he said.

McGuire added that he expects the transaction to create $300-$500 million of additional excess capital by the end of 2016.

“This would provide us with substantially improved financial flexibility to further invest and continue the development of our business, to expand our underwriting or investment risk appetite if conditions improve, or to manage our capital base.”