REG-XL Group plc Acquisition <Origin Href="QuoteRef">CGL.L</Origin> <Origin Href="QuoteRef">XL.N</Origin> - Part 2

CastelnauAnnouncement

28/01/2015 24:09

- Part 2: For the preceding part double click  ID:nBw9jYtt7a 

intend unanimously to recommend that Catlin
Shareholders vote in favour of the resolutions to approve the Acquisition, which
are to be proposed at the Court Meeting and at the General Meeting. In addition,
the Catlin Directors have irrevocably undertaken to vote or procure votes in
favour of such resolutions (or, in the event that the Acquisition is implemented
by way of a Takeover Offer, to accept or procure acceptance of such offer), in
respect of their (and, if applicable, their spouse`s) holdings of Catlin Shares,
in aggregate, representing 7,894,061 Catlin Shares constituting approximately
2.18 per cent. of Catlin`s issued share capital as at 8 January 2015 (being the
latest practicable date prior to the date of this announcement). 

Barclays has also provided financial advice to the Catlin Directors in relation
to the Acquisition. 

6.Background to and Reasons for the Recommendation

Catlin is a highly regarded, specialty insurance and reinsurance business, with
a strong presence at Lloyd`s and a broader underwriting platform that is
supported by a diverse international network of offices and underpinned by
excellent people and culture. Disciplined underwriting combined with geographic
and product diversification has been at the core of Catlin`s strategy. Since the
Catlin Group was established in 1984, it has sought to underwrite for profit,
with good top-line growth in premiums driving attractive growth in the
bottom-line. Outside of London, Catlin has five underwriting hubs, which have
demonstrated meaningful growth both in terms of premium volume and net
underwriting contribution over recent years. Catlin continues to see profitable
growth opportunities outside of London, and its decade-long investment in a
global infrastructure will allow it to pursue these opportunities as they arise.


Despite the progress Catlin has made as a standalone company, the outlook for
the insurance and reinsurance markets is becoming increasingly challenging.
Whilst the Catlin Board believes that Catlin is well positioned to succeed as an
independent business, it recognises that further economies of scale, increased
diversification (in terms of business mix) and improved standing with insurance
intermediaries, will be critical factors for the development of the industry in
future years. 

The proposed combination with XL builds on each business`s core strengths,
creating one of the largest global specialty insurance players with an improved
client proposition. This combination is expected to enable the two businesses to
deliver sustainable and more attractive returns to shareholders against this
changing industry backdrop. 

The Catlin Board has considered the terms of the Acquisition in relation to the
value and prospects and the potential medium-term standalone value of Catlin. In
particular, the Catlin Board considered the following factors: 
 
* strategic benefits from scale in the industry through the creation of a
leading global (re)insurance platform with a leading position in all major
insurance markets; 
* enhanced growth opportunities from the combination of two industry leading
underwriting teams, with a broader product set and increased relevance for
clients; 
* benefits from each business` competencies, geographic footprints, and
technological capabilities through the complementary nature of the two
businesses; 
* participation in significant financial benefits from cost synergies,
reinsurance and other savings; 
* strong cultural compatibility with key executives of Catlin taking prominent
management positions within the combined organisation and ensuring a smooth
integration of both firms` operations; 
* attractive financial terms of the transaction providing shareholders with an
attractive premium upfront, while maintaining continued up-side exposure from a
shareholding in the combined entity; and 
* maintaining the ability for Catlin Shareholders to receive value from the sale
of Catlin`s interest in Box Innovation Group Limited through the ITB Special
Dividend. 
 
In light of these factors, and having received advice from its financial
advisers, the Catlin Board unanimously recommends the Acquisition to Catlin
Shareholders as set out in paragraph 5 above. 

7.Irrevocable Undertakings

XL has received irrevocable undertakings to vote or procure votes in favour of
the resolutions to approve the Acquisition, which are to be proposed at the
Court Meeting and General Meeting (or, in the event that the Acquisition is
implemented by way of a Takeover Offer, to accept or procure acceptance of such
offer) from the directors of Catlin, in respect of 7,894,061 Catlin Shares, in
aggregate, representing approximately 2.18 per cent. of the issued share capital
of Catlin on 8 January 2015 (being the latest practicable date prior to the date
of this announcement). 

The irrevocable undertakings provided by the directors of Catlin will cease to
be binding only if the Acquisition lapses or is withdrawn and will remain
binding if a higher competing offer is made for Catlin. 

Mr. Catlin intends to continue to hold New XL Shares as a long-term investment
following the Acquisition, reflecting the parties` shared belief in the benefits
of creating a combined company. 

Further details of these irrevocable undertakings, including the circumstances
in which they cease to apply, are set out in Appendix III. 

8. Information on XL

XL Group plc, domiciled in Ireland, is a global insurance and reinsurance
business providing property, casualty and specialty products to industrial,
commercial and professional firms, insurance companies and other enterprises on
a worldwide basis. 

XL was founded in 1986 with the formation of EXEL Limited. XL Capital Ltd was
formed as a result of the merger of EXEL Limited and Mid Ocean Limited in 1998.
In 1990, XL opened its first office outside the Caribbean when XL Insurance
Company opened in Dublin, Ireland. In 1999, XL Capital Ltd merged with NAC Re
Corp. in a stock merger. In 2001, XL acquired certain Winterthur International
insurance operations for its fit for purpose network of international offices,
and to facilitate XL`s global expansion. In July 2010, XL Group plc, a newly
formed Irish public limited company and XL Capital Ltd (now known as XLIT Ltd.),
an exempted company organised under the laws of the Cayman Islands
("XL-Cayman"), completed a redomestication transaction in which all of the
ordinary shares of XL-Cayman were exchanged for all of the ordinary shares of
XL. As a result, XL-Cayman became a wholly-owned subsidiary of XL. 

XL is organised into two operating segments: Insurance and Reinsurance. XL`s
general investment and financing operations and run-off life operations are
reflected in Corporate and Other. The following table sets forth XL`s gross
premiums written by segment for the years ended 31 December 2013, 2012 and
2011. 
 
                                                                                               
 (U.S. dollars in millions)      Gross premiums written                                        
                                 2013                    2012                    2011          
 Insurance                       $    5,523              $    5,167              $    4,825    
 Reinsurance                     1,894                   2,008                   2,074         
 Corporate and Other             324                     356                     395           
 Total                           $    7,741              $    7,531              $    7,293    
                                                                                               
 
 
* Insurance: XL`s insurance operations provide customised insurance policies for
complex corporate risks that may require large limits and are marketed and
distributed through a wide variety of local, national and international
producers. Large deductibles and self-insured retentions are incorporated into
these policies to further manage risk along with stringent underwriting
guidelines. Whilst XL`s insurance operations are known for insuring large
complex risk, certain of XL`s products are targeted to small and midsize
companies and organisations, such as XL`s professional liability and program
business. XL focuses on those lines of business that XL believes will provide
the best return on capital over time. 
* Reinsurance: This segment provides casualty, property risk, property
catastrophe, marine, aviation, treaty and other specialty reinsurance on a
global basis with business being written on both a proportional and
non-proportional basis and also on a facultative basis. XL`s lines of business
within the reinsurance segment continue to focus on those that provide the best
return on capital. For XL`s Reinsurance segment, challenging market conditions
and the changing economic environment experienced since 2008 resulted, in
certain instances, in a greater emphasis being placed on short-tail lines of
business. 
 
Through a series of transactions from 2009 through 2014, XL has largely exited
the life reinsurance business. Most recently, in May 2014, XL entered into a
retrocession transaction with GreyCastle Holdings Ltd. that included the sale of
XL Life Reinsurance (SAC) Ltd for $570 million in cash. 

At 31 December 2013, XL had 4,291 employees. XL`s ordinary shares, with a $0.01
par value per share, are listed on the NYSE under the symbol "XL", and as at 8
January 2015, being the latest practicable date prior to the date of this
announcement, XL had a market capitalisation of $9.2 billion. XL expects to
cease stock buybacks until the Acquisition has closed. At that time, XL will
re-evaluate its stock buyback program for the combined company. 

9. Information on Catlin

Catlin Group Limited, domiciled in Bermuda, is an international specialist
property/casualty insurer and reinsurer that underwrites worldwide through six
underwriting hubs. 

Catlin was originally established in 1984 as a Lloyd`s underwriting agency
formed to manage a new underwriting syndicate. During the past 30 years, Catlin
has grown to become a leading international specialist insurer and reinsurer
that includes the largest underwriting syndicate at Lloyd`s and (re)insurance
companies/branches based in Bermuda, the United Kingdom, the United States,
Switzerland and Singapore. The holding company, Catlin Group Limited, was
domiciled in Bermuda in 1999. 

Since 1999, Catlin has diversified geographically from its traditional London
base, establishing over 50 offices in 25 countries worldwide. To reflect this
international focus, Catlin has organised its operations into "underwriting
hubs" located in London, Bermuda, the United States, the Asia-Pacific region,
Europe and Canada. Through these hubs, Catlin works closely with policyholders
and their brokers. The hubs also provide Catlin with product and geographic
diversity. 

Catlin`s financial reporting segments are based on its international hub
structure: London, US, Bermuda and International (Europe, Asia-Pacific and
Canada). 

Catlin underwrites a broad range of property/casualty insurance for businesses
and professionals. It also underwrites a small amount of Life business through
Lloyd`s syndicate 3002, which is owned and managed by Catlin. Catlin`s
underwriting operations are split into six product groups: 
 
* Aerospace, which includes Airline, General Aviation, Airport, Aviation
Products and Space/Satellite coverages; 
* Casualty, which includes General Liability, Professional Lines, Healthcare
Liability, Financial Lines and Motor coverages; 
* Energy and Marine. Energy, includes Upstream and Downstream Energy, Onshore
Energy and Power, and Energy Liability coverages. Marine, includes Marine Hull,
Cargo and Specie coverages; 
* Property, which includes Property, Binding Authorities, Commercial Combined
and Construction & Engineering coverages; 
* Reinsurance, which includes Property, Casualty, Marine & Aviation, Agriculture
and Specialty classes of reinsurance; and 
* Specialty and War and Political Risk. Specialty, includes Accident & Health,
Life, Aquaculture, Equine and Livestock coverages. War & Political Risk,
includes Political Risk, Political Violence and Terrorism, Contingency, Trade
Credit, Product Recall and Kidnap & Ransom/Piracy coverages. 
 
Catlin shares are traded on the London Stock Exchange. Based on the Closing
Price for a Catlin Share as at 8 January 2015, being the latest practicable date
prior to the date of this announcement, Catlin has a market capitalisation of
$3.9 billion (based on an assumed 390,000,000 Catlin Shares in issue as of the
Effective Date). Catlin`s total shareholders` equity amounted to $4.0 billion at
30 June 2014 (including $590 million of non-controlling interest in preferred
stock of consolidated subsidiaries), while total assets exceeded $16 billion. 

The following table sets forth Catlin`s gross premiums written by reporting
segment for the years ended 31 December 2013, 2012 and 2011. 
 
                                                                                     
 (U.S. dollars in millions)  Gross premiums written                                  
                                         2013                  2012                  20 
                                                                                     11 
 London                      $    2,474            $    2,525            $    2,342  
 US                          1,213                 1,045                 852         
 Bermuda                     577                   523                   549         
 International               1,045                 879                   770         
                                                                                     
 Group total                 $    5,309            $    4,972            $    4,513  
 
 
10.Catlin Share Schemes

Appropriate proposals will be made in due course to participants in the Catlin
Share Schemes. The Acquisition will extend to any Catlin Shares which are
unconditionally allotted or issued as a result of the exercise of existing
options and vesting of awards under the Catlin Share Schemes on or prior to the
time on which the Acquisition becomes effective. 

11.Financing

Whilst the cash consideration payable by XL under the terms of the Acquisition
is anticipated to be funded by approximately $1.25 billion of cash on hand and
through the issuance of approximately $1.03 billion of Solvency II compliant
fixed income securities, XL is able to rely on £1,600,000,000 of debt to be
provided under a bridge facility arranged by Morgan Stanley Senior Funding, Inc.
and Goldman Sachs Bank USA, with a maturity date of 364 days from the date of
initial funding of the bridge loans ("Bridge Facility"). 

Each of Morgan Stanley & Co. International plc and Goldman Sachs International,
financial advisers to XL, is satisfied that cash resources are available to XL
sufficient to enable it to satisfy in full the cash consideration payable to
Catlin Shareholders under the terms of the Acquisition. 

Under the terms of the Bridge Facility, XL and its subsidiaries have agreed: 
 
* as a condition to the lenders` obligation to fund the Bridge Facility, that
the Acquisition be consummated in all material respects pursuant to the relevant
documents provided to the lenders relating to the Acquisition, without giving
effect to any modifications, consents, amendments or waivers that would be
materially adverse to the interests of the lenders or the joint lead arrangers,
unless such modifications, consents, amendments or waivers are required by the
Code Committee established under the Implementation Agreement (and, if
applicable, the Code Expert appointed pursuant to the Implementation Agreement)
in accordance with the terms of the Implementation Agreement, or each of the
joint lead arrangers have provided their written consent thereto, and that in
the case of any such modifications, consents, amendments or waivers required by
the Code Committee that would be materially adverse to the interests of the
lenders or the joint lead arrangers, upon the request of either joint lead
arranger, XL will be required to obtain written confirmation from the Code
Expert that the Code Expert concurs with such requirement of the Code Committee;
and 
* should the Acquisition be implemented by way of a Takeover Offer, not to
declare the Takeover Offer unconditional as to acceptances until it has received
valid acceptances (which have not been validly withdrawn) from shareholders of
Catlin whose equity interests (excluding equity interests of Catlin held by the
XL and its concert parties (as defined in the Code)) would, following
acquisition of those equity interests, represent not less than 90 per cent. of
the equity interests of Catlin to which the Takeover Offer relates (or such
other minimum percentage as XL may determine (with prompt notification thereof
to the administrative agent under the Bridge Facility) but representing, in the
aggregate (and together with equity interests of Catlin held by XL and its
concert parties), not less than 75 per cent. of the voting rights carried by the
equity interests of Catlin). 
 
Further information on the financing of the Acquisition will be set out in the
Circular. 

12.Management and Employees

XL has high regard for the skills and experience of the existing management and
employees of the Catlin Group. XL confirms their existing employment rights,
including pension rights, will be honoured. 

XL believes that the combined business will provide enhanced opportunities for
employees from both organisations. XL intends to utilise the following key
principles: 
 
* create an organisation that draws upon the talent of both XL`s and Catlin`s
teams; and 
* identify roles for certain Catlin senior management team post integration. 
 
At the most senior levels, key elements of the post-Acquisition organisation and
joint integration planning approach have been agreed. Mike McGavick will be
Chief Executive Officer of XL. At closing, it is expected that Stephen Catlin
will join the Enlarged XL Group as Executive Deputy Chairman and is also
expected to serve on its Board of Directors. Peter Porrino will continue as
Chief Financial Officer. Greg Hendrick would assume the role of Chief Executive
of Reinsurance, assuming responsibility for the combined reinsurance business
and leading all alternative capital strategies. In the Enlarged XL Group, Paul
Brand, Catlin`s Chief Underwriting Officer, would have the position of Chair
Insurance Leadership Team, Chief Underwriting Officer Insurance, and would have
responsibility for capital allocation and purchasing outward reinsurance for the
group. Kelly Lyles, currently XL`s Head of Professional Insurance would have the
position of Deputy Chair, Insurance Leadership Team and Chief Regional Officer,
Insurance. Together, Mr. Brand and Ms. Lyles will lead all aspects of Insurance
for the combined company and both will report to Mike McGavick. An additional
Catlin director who meets applicable independence qualifications and other
criteria is also expected to join the XL board of directors in connection with
the closing of the transaction. 

In order to realise the potential benefits of the Acquisition, XL will consider
and evaluate, as part of its overall strategy for the Enlarged XL Group, how
best to draw upon the talents of the broader Catlin and XL organisations. It is
expected that headcount reductions will be required, although XL has not yet
developed specific plans as to how such headcount reductions will be implemented
or where they will be implemented. In addition, XL anticipates there will be
some consolidation of office locations given the overlapping footprints of
Catlin and XL. For the benefit of the combined business, in some instances the
Catlin office is likely to be maintained whereas in others the XL office. XL and
Catlin plan to establish an integration planning team in order to create an
organisation that draws upon the talent of both XL and Catlin`s business and
functional teams. The team will be led for XL by Myron Hendry, XL`s Chief
Platform Officer, and for Catlin by Adrian Spieler, Catlin`s Chief
Administrative Officer, with support from the extended leadership teams on both
sides. 

Recognising their long term commitment to the combined business and to ensure
the ongoing success of the Enlarged Group and the successful integration of
Catlin and XL: 
 
* Stephen Catlin has agreed in principle to enter into a new employment
agreement with XL Services (Bermuda) Ltd and XL Group plc, subject to the
successful completion of the Acquisition. Further details when executed will be
set out in the Circular. 
* Paul Brand is expected to enter into a new employment agreement with XL
Services UK Limited. Details of any such agreement will be set forth in the
Circular. 
 
XL intends to review terms and conditions for other key employees prior to
completion of the Acquisition but no proposals have been made to date. 

13.Mix and Match Facility

Catlin Shareholders (other than certain Overseas Shareholders) will be entitled
to elect to vary the proportions in which they receive New XL Shares and cash in
respect of their holdings of Catlin Shares. However, the total number of New XL
Shares to be issued and the maximum aggregate amount of cash to be paid under
the Acquisition will not be varied as a result of elections under the Mix and
Match Facility. 

Accordingly, elections made by Catlin Shareholders under the Mix and Match
Facility will be satisfied only to the extent that other Catlin Shareholders
make off-setting elections. To the extent that elections cannot be satisfied in
full, they will be scaled down on a pro rata basis. As a result, Catlin
Shareholders who make an election under the Mix and Match Facility will not know
the exact number of New XL Shares or the amount of cash they will receive until
settlement of the consideration due to them in respect of the Acquisition. 

The basis on which Catlin Shareholders may vary the proportions in which they
receive New XL Shares and cash in respect of their holdings of Catlin shares
will be set out in the Circular to be published in due course. 

In the event that a Catlin Shareholder does not make an election under the Mix
and Match Facility it will receive 388 pence in cash and 0.130 New XL Share for
each Catlin Share. 

Further details of the Mix and Match Facility (including the action to take in
order to make a valid election, the deadline for making elections, and the basis
on which entitlement to receive cash may be exchanged for an entitlement to
additional New XL Shares (or vice versa)) will be included in the Circular. 

14.Offer-Related Arrangements

Confidentiality Agreement

On 16 July 2013, XL and Catlin entered into the Confidentiality Agreement
pursuant to which each of XL and Catlin have agreed to keep confidential
information about the other party and not to disclose to third parties (other
than permitted recipients) confidential information exchanged by them unless
required by law or regulation, the rules of any stock exchange or by legal
process. As amended by the Implementation Agreement, these confidentiality
obligations will remain in force until the earlier of (i) the completion of the
Acquisition or (ii) 9 October 2015. 

15.Implementation Agreement

XL, XL Sub and Catlin have entered into an Implementation Agreement in relation
to the Acquisition and other related matters. The Implementation Agreement
contains certain undertakings, assurances and confirmations among the parties,
including with respect to the implementation of the Acquisition. 

As Catlin is incorporated and has its registered office in Bermuda, the Code
does not apply to XL, XL Sub or Catlin, or in relation to the Acquisition.
However, in accordance with the requirements of the Bye-Laws and pursuant to the
terms of the Implementation Agreement, XL, XL Sub and Catlin have agreed to
implement the Acquisition, and to observe and comply with the provisions of the
Code, as if Catlin were subject to the Code. In particular, XL has specifically
undertaken that Rule 13 of the Code will govern the circumstances in which it
can invoke any Condition so as to cause the Acquisition to lapse and Catlin has
specifically undertaken that Rule 21 of the Code will apply to it in the period
pending the Effective Date. XL has also agreed to certain restrictions pending
the Effective Date, including as to its ability to pay dividends, alter its
capital structure or amend its constitutional documents, subject to various
exceptions. 

Pursuant to the Implementation Agreement, XL and Catlin have agreed to appoint a
committee comprised of three representatives appointed by each of them (the
"Code Committee"), which will be responsible for determining how the Code would
be interpreted and applied in relation to the Acquisition had Catlin been
subject to the Code. The Implementation Agreement also provides for referral of
any matter relating to the interpretation and application of the Code to an
independent expert (the "Code Expert"), whose rulings will (absent fraud or
manifest error) be final and binding on the parties. 

Pursuant to the Implementation Agreement, XL and Catlin agree to co-operate and
assist each other in obtaining the Clearances required to satisfy the
Conditions. 

The Implementation Agreement sets out the parties` agreement as to the
treatment, in relation to the Acquisition, of participants in the Catlin Share
Schemes. 

The Implementation Agreement also sets out the circumstances in which XL may
elect to implement the Acquisition by way of a Takeover Offer or Bermuda Merger.
XL may elect, with the prior written consent of either (i) Catlin, or (ii) the
Code Committee or the Code Expert, to implement the Acquisition by way of a
Takeover Offer. XL may also elect, with the agreement of Catlin, to implement
the Acquisition by way of a Bermuda Merger. In such circumstances, the Code
Committee or the Code Expert shall determine the timetable for the Takeover
Offer or Bermuda Merger. 

The Implementation Agreement is terminable: 
 
* upon agreement in writing between XL and Catlin at any time prior to the
Effective Date; 
* by Catlin, by written notice to XL, at any time prior to the Effective Date; 
* by XL, by written notice to Catlin, stating that (i) any Condition which has
not been waived (or is incapable of waiver) is (or has become) incapable of
satisfaction by the Long Stop Date, and (ii) notwithstanding that it may have
the right to waive such Condition, it will not do so; provided that XL would, in
accordance with the Implementation Agreement, be entitled to invoke (and not
obliged to waive) such Condition; 
* by XL, by written notice to Catlin, if: (i) the Catlin Board notifies XL or
publicly states that it no longer recommends (or intends to recommend) that
Catlin Shareholders vote in favour of, the Acquisition; (ii) the Catlin Board
fails to provide, adversely modifies or qualifies the Catlin Board
recommendation in favour of the Acquisition or withdraws (or publicly states
that it intends to withdraw) such recommendation (provided that, in the case of
(i) and (ii), but without prejudice to (vi) or (vii) below, the circumstances in
(i) and (ii) above shall be deemed not to have arisen by reason only of any
adjournment of either or both of the Court Meeting and the General Meeting for a
specified period of time or any delay of the Court Hearing; (iii) following the
Court Meeting or the General Meeting, the Catlin Board notifies XL in writing or
publicly states that Catlin will not seek the sanctioning of the Scheme by the
Court; (iv) the Catlin Board recommends a competing offer with a third party;
(v) the Scheme does not become effective by the Long Stop Date in accordance
with its terms; (vi) either the Court Meeting or the General Meeting has not
been held by the date which is 22 days after the expected date for such meeting
as set out in the Circular (unless extended with the written agreement of XL and
Catlin); or (vii) the Court Hearing has not been held by the date which is 22
days after the expected date for such hearing as set out in the Circular (unless
extended with the written agreement of XL and Catlin) (each of (i), (ii), (iii),
(iv), (v), (vi) and (vii) being a "Relevant Withdrawal Event"); provided that
for the purposes hereof, none of the following shall itself constitute a
Relevant Withdrawal Event: (a) any Catlin Director(s) not joining (or not
continuing to participate) in any recommendation or intended recommendation so
long as such recommendation or intended recommendation is concurrently
maintained and reconfirmed by at least a majority of the entire Catlin Board;
and (b) any holding statement(s) issued by the Catlin Board to Catlin
Shareholders following a change of circumstances so long as (x) any such holding
statement contains an express statement that such recommendation is not
withdrawn and does not contain a statement that the Catlin Board intends to
withdraw such recommendation and (y) if and only if the Code Expert imposes a
deadline for the clarification of such holding statement, at least a majority of
the Catlin Board maintains and reconfirms its recommendation to Catlin
Shareholders to vote in favour of the resolutions at the Court Meeting and the
General Meeting by such deadline; 
* by either XL or Catlin, by written notice to the other, if the Acquisition
would be regarded as having lapsed or been withdrawn for the purposes of the
Code; and 
* by either XL or Catlin, by written notice to the other, if the Effective Date
has not occurred by the Long Stop Date. 
 
Merger Agreement

The Merger Agreement provides that immediately following, and conditional only
upon, the Scheme becoming effective, Catlin will merge with and into XL Sub
pursuant to Section 104H of the Bermuda Companies Act, with XL Sub continuing as
the surviving company. If the Implementation Agreement is terminated, or if XL
publicly announces a Takeover Offer or Bermuda Merger (subject to and in
accordance with the Implementation Agreement, the Merger Agreement will
terminate. 

The Catlin Board and the board of directors of XL have approved the Merger and
the Merger Agreement. XL, as sole shareholder of XL Sub, has approved the Merger
and the Merger Agreement, and immediately following effectiveness of the Scheme,
XL, as sole shareholder of Catlin, will approve the Merger and the Merger
Agreement. 

Code Application Letter

XL and Catlin have entered into a letter agreement dated 9 January 2015,
pursuant to which they have agreed, among other things, that, for the purpose of
Rule 13.5(a) of the Code, it would be of material significance to XL in the
context of the Acquisition, if any of Condition C (PRA approval), Condition D
(relating to Lloyd`s approval), Condition E (Bermuda Monetary Authority
approval), Condition F (FINMA approval), Condition G (Delaware Department of
Insurance approval), Condition H (Texas Department of Insurance approval),
Condition I (New York Department of Financial Services approval) (if applicable)
or Condition M (United States Hart-Scott-Rodino clearance) is not satisfied. 

16. Description of the Scheme and the Merger

The Acquisition

It is intended that the Acquisition will comprise a two-step, integrated
process. The first step will be the acquisition by XL of the entire issued and
to be issued share capital of Catlin by way of a scheme of arrangement under
Section 99 of the Bermuda Companies Act. In the second step, immediately
following the Scheme becoming effective, Catlin will merge with and into XL Sub,
a wholly owned subsidiary of XL, pursuant to Section 104H of the Bermuda
Companies Act and the terms of the Merger Agreement, such that XL Sub is the
surviving company. 

The Scheme of Arrangement

The purpose of the Scheme is to provide for XL to become the owner of the whole
of the issued and to be issued share capital of Catlin. 

In summary, the Scheme will involve: 
 
* the cancellation of all Catlin Shares in issue at the Scheme Record Time
(other than the Excluded Shares), in consideration for which Scheme Shareholders
will receive the Acquisition Consideration; and 
* the allotment and issue of new shares in Catlin to XL, as a result of which
Catlin will become a wholly owned subsidiary of XL. 
 
In addition, it is intended that the Bye-Laws will be amended in order to ensure
that any Catlin Shares issued (other than to any member of the XL Group or their
respective nominees) between approval of the Scheme at the Court Meeting and the
Scheme Record Time will be subject to the Scheme, and that any Catlin Shares
issued (other than to any member of the XL Group or their respective nominees)
after the Scheme Record Time will automatically be acquired by XL for the
Acquisition Consideration. 

To become effective, the Scheme requires the approval of the Catlin Shareholders
by the passing of a resolution at the Court Meeting. The resolution to be
proposed at the Court Meeting must be approved by a majority in number
representing not less than three-fourths of the voting rights of the holders of
the Catlin Shares (or the relevant class or classes thereof, if applicable)
present and voting, either in person or by proxy, at the Court Meeting. 

In addition, the implementation of the Scheme will require a special resolution
to be passed at the General Meeting, which is intended to be held immediately
after the Court Meeting. The special resolution to be proposed at the General
Meeting requires approval by not less than three-fourths of the votes cast by
holders of Catlin Shares present and voting at the General Meeting (either in
person or by proxy). 

The Scheme is also conditional on the matters referred to in Appendix I to this
announcement. 

Following the Court Meeting and the General Meeting, the Scheme must be
sanctioned by the Court. The Scheme will become effective in accordance with its
terms on delivery of the Scheme Court Order to the Registrar of Companies.
Catlin will not cause or permit the Scheme to become effective unless and until
the other Conditions have been satisfied (or, where required or permitted in
accordance with the Implementation Agreement, waived). 

Upon the Scheme becoming effective, it will be binding on all Catlin
Shareholders, whether or not they attended or voted at the Court Meeting and/or
the General Meeting or if they voted against the resolutions. As required by the
Code, the Acquisition Consideration will be dispatched by XL to Scheme
Shareholders no later than 14 days after the Effective Date. 

The Scheme will contain a provision for XL and Catlin acting jointly to consent,
on behalf of all persons concerned, to any modification of or addition to the
Scheme or to any condition that the Court may approve or impose. Catlin has been
advised that the Court would be unlikely to approve any modification of, or
addition to, or impose a condition to the Scheme which might be material to the
interests of Scheme Shareholders unless Scheme Shareholders were informed of
such modification, addition or condition. It would be a matter for the Court and
for the Catlin Board to decide, in their discretion, whether or not a further
meeting of the Scheme Shareholders should be held in these circumstances. 

The Circular will include full details of the Scheme, together with notice of
the Court Meeting and the General Meeting and the expected timetable, and will
specify the action to be taken by Scheme Shareholders. 

The Scheme will be governed by Bermuda law. The Scheme will be subject to the
applicable requirements of the Bermuda Stock Exchange, the London Stock Exchange
and the FCA. 

The Merger

Pursuant to the Merger Agreement, immediately following, and conditional only
upon, the Scheme becoming effective, Catlin will merge with and into XL Sub,
with XL Sub continuing as the surviving company. 

The Scheme and the Merger are intended to be a single, integrated transaction
that qualifies as a reorganisation for U.S. federal income tax purposes. 

The Circular will include full details of the Merger. The Merger will be
governed by Bermuda law. 

17.Listing and Commencement of Dealings in New XL Shares and Irish Prospectus

Application will be made for the listing of New XL Shares on the New York Stock
Exchange. Details of how Catlin Shareholders can hold, access and trade the New
XL Shares will be set out in the Circular. 

XL will also be required to produce the Irish Prospectus in connection with the
issue of the New XL Shares. Approval and publication of the Irish Prospectus,
including in the United Kingdom, is a Condition to the Acquisition. 

18.De-listing of Catlin Shares

Prior to the Effective Date, Catlin will apply to cancel the listing of the
Catlin Shares on the Official List and the trading of the Catlin Shares on the
London Stock Exchange`s main market for listed securities. The last day of
dealings in Catlin Shares on the London Stock Exchange is expected to be the
last Business Day before the Effective Date. In addition, with effect from the
Effective Date, entitlements to Catlin Shares held within the CREST system will
be cancelled. 

19.Fractional Entitlements

Fractions of New XL Shares will not be allotted to Catlin Shareholders. Instead,
all fractional shares which a holder of Catlin Shares would otherwise be
entitled to receive will be aggregated and calculations will be rounded down to
four decimal places (0.0001), and such holder shall receive, in lieu of such
fractional entitlements, cash in an amount (rounded down to the nearest penny)
equal to such fractional amount multiplied by the last reported sale price of XL
Shares on the New York Stock Exchange (as reported in The Wall Street Journal
or, if not reported therein, in another authoritative source selected by XL) on
the last complete trading day prior to the Effective Date. 

20.Catlin ADRs

Holders of Catlin ADRs will not be entitled to vote directly on the Acquisition.
Instead, Catlin will request that the Catlin ADR Depositary deliver to holders
of Catlin ADRs a notice of (or notices for) the Court Meeting and the General
Meeting, and holders of Catlin ADRs will have the right to instruct the Catlin
ADR Depositary how to vote the Catlin Shares underlying the Catlin ADRs with
respect to the Acquisition, subject to and in accordance with the terms of the
depositary agreement with the Catlin ADR Depositary, a copy of which is
available free of charge at the SEC`s website at www.sec.gov or by directing a
request to Catlin`s contact for enquiries identified above. 

21.Opening Position Disclosure and Disclosure of Interests in Catlin

XL confirms that it will today make an Opening Position Disclosure, setting out
the details required to be disclosed by it under Rule 8.1(a) of the Code (as if
the Code applied to Catlin and to the Acquisition). 

XL, together with other members of the XL Group, holds no interests in Catlin
Shares. 

As at the close of business on 8 January 2015, being the latest practicable date
prior to the date of this announcement, save for: (i) the Opening Position
Disclosure released by XL on the date hereof; and (ii) the irrevocable
undertakings referred to in paragraph 7 above, none of XL nor any of its
directors nor, so far as XL is aware, any person acting, or deemed to be acting,
in concert with XL: 
 
* had an interest in, or right to subscribe for, relevant securities of Catlin; 
* had any short position in (whether conditional or absolute and whether in the
money or otherwise), including any short position under a derivative, any
agreement to sell or any delivery obligation or right to require another person
to purchase or take delivery of, relevant securities of Catlin; 
* had procured an irrevocable commitment or letter of intent to accept the terms
of the Acquisition in respect of relevant securities of Catlin; or 
* had borrowed or lent any Catlin Shares. 
 
Furthermore, save for the irrevocable undertakings described in paragraph 7
above, neither XL nor any person acting in concert with XL is a party to any
dealing arrangement in relation to Catlin Shares. For these purposes, a "dealing
arrangement" includes any indemnity or option arrangement, any agreement or any
understanding, formal or informal, of whatever nature, relating to Catlin Shares
which may be an inducement to deal or refrain from dealing in such securities. 

22.Conditions to the Acquisition

Appendix I to this announcement sets out the Conditions and further terms to
which the Acquisition will be subject, including with respect to certain
Clearances that are required in order for the Acquisition to proceed. 

The Acquisition is conditional on, among other things: 
 
* the approval of the Scheme by the Catlin Shareholders at the Court Meeting,
which approval requires a majority in number representing not less than
three-fourths of the voting rights of the holders of the Catlin Shares (or the
relevant class or classes thereof, if applicable) present and voting at the
Court Meeting (either in person or by proxy); 
* the approval by Catlin Shareholders of the special resolution to be proposed
at the General Meeting, which approval requires not less than three-fourths of
the votes cast by holders of Catlin Shares present and voting at the General
Meeting (either in person or by proxy); 
* the Court Meeting and the General Meeting being held no later than the day
which is 22 days after the expected date for such meetings (to be set out in the
Circular to be published in due course); 
* the Court Hearing being held no later than the day which is 22 days after the
expected date of the Court Hearing (to be set out in the Circular to be
published in due course); 
* the relevant Clearances having been received, on terms reasonably satisfactory
to XL, from: the PRA; Lloyd`s; the Bermuda Monetary Authority; FINMA; insurance
regulators in Delaware, Texas and (if applicable) New York; 
* the sanction of the Scheme by the Court; and 
* the Acquisition having become effective on or before 9 October 2015 or such
later date as Catlin and XL may agree. 
 
23. Total Shares in Issue

Catlin confirms that as at the close of business on 8 January 2015, being the
latest practicable date prior to the date of this announcement, it had
362,570,229 common shares in issue and admitted to trading on the Main Market of
the London Stock Exchange under ISIN reference BMG196F11004 and ticker symbol
CGL. 

XL confirms that as at the close of business on 8 January 2015, being the latest
practicable date prior to the date of this announcement, it had 255,178,939
ordinary shares in issue and admitted to trading on the New York Stock Exchange
under ISIN reference IE00B5LRLL25 and ticker symbol XL. 

24.General

XL and Catlin have agreed that XL may (in accordance with and subject to the
terms of the Implementation Agreement) implement the Acquisition by making,
directly or indirectly through XL Sub, a Takeover Offer as an alternative to the
Scheme. XL may implement the Acquisition by way of a Takeover Offer only with
Catlin`s prior written consent or with the consent of the Code Committee or the
Code Expert. XL may also, with Catlin`s agreement, implement the Acquisition by
way of a Bermuda Merger. 

Any Takeover Offer or Bermuda Merger (as the case may be) will be implemented on
the same terms, so far as applicable (subject to appropriate amendments), as
those which would apply if the Acquisition were implemented by way of the
Scheme. 

If the Acquisition is effected by way of a Takeover Offer and such offer becomes
or is declared unconditional in all respects and sufficient acceptances are
received, XL intends (i) to request that the London Stock Exchange and the UKLA
cancel trading in Catlin Shares on the London Stock Exchange`s Main Market for
listed securities and the listing of Catlin Shares on the Official List; and
(ii) to exercise its rights under the Bermuda Companies Act to acquire
compulsorily any outstanding Catlin Shares to which such offer relates, or in
the event that the acceptance condition to the Takeover Offer is set at or above
75 per cent. but less than 90 per cent., as promptly as reasonably practicable
following the acquisition of the majority of the Catlin Shares to which such
offer relates, to effect a merger or an amalgamation in accordance with the
Bermuda Companies Act, in each case for acquisition consideration that consists
of 388 pence and 0.130 New XL Share for each Catlin Share so acquired. 

It is expected that the Circular will be dispatched to Catlin Shareholders
simultaneously with or shortly after the publication of the Irish Prospectus in
respect of the New XL Shares. It is currently expected that the Court Meeting
and General Meeting will be held in the second quarter of 2015 and the
Acquisition is expected to become effective in mid-2015, subject to obtaining
the Clearances without delay and to the satisfaction (or waiver) of the other
Conditions set out in Appendix I to this announcement. 

In deciding whether or not to vote or procure votes in favour of the resolutions
to be proposed at the Court Meeting and at the General Meeting, Catlin
Shareholders should rely on the information contained, and follow the procedures
described, in the Circular and the form of proxy and direction accompanying the
Circular and, in relation to the New XL Shares, the Irish Prospectus. 

25.Consents

Morgan Stanley, Goldman Sachs International, J.P. Morgan Cazenove, Evercore,
Barclays and Ernst & Young have each given and not withdrawn their consent to
the publication of this announcement with the inclusion herein of the references
to their names in the form and context in which they appear. 

26.Documents on Display

Copies of this announcement and the following documents will, by no later than
12:00 p.m. (London time) on the Business Day following the date of this
announcement, be made available on XL`s website at www.xlgroup.com and Catlin`s
website at www.catlin.com: 
 
* the Confidentiality Agreement; 
* the Implementation Agreement; 
* the Merger Agreement; 
* the Code Application Letter; and 
* the irrevocable undertakings referred to in paragraph 7 above and summarised
in Appendix III to this announcement. 
 
Neither the contents of Catlin`s website or the contents of XL`s website, nor
the content of any other website accessible from hyperlinks on either such
website, is incorporated into or forms part of, this announcement. 

Enquiries 
 
 XL                                                                                                      
 David Radulski (Investor Relations)                                          Tel: +1 (203) 964 3470     
 Elliott Bundy (Communications)                                               Tel: +1 (203) 674 6932     
 Morgan Stanley (financial adviser to XL)                                                                
 Ian Hart                                                                     Tel: +44 (0) 207 425 8000  
 Eric Bischof                                                                 Tel: +1 (212) 761 4000     
 Gavin McFarland                                                              Tel: +1 (212) 761 4000     
 Goldman Sachs International (financial adviser to XL)                                                   
 Andrea Vittorelli                                                            Tel: +1 (212) 902 1000     
 Nimesh Khiroya                                                               Tel: +44 (0) 207 774 1000  
 Jason Eisenstadt                                                             Tel: +1 (212) 902 1000     
 Sard Verbinnen & Co. (PR adviser to XL)                                                                 
 Drew Brown / Chris Kittredge (New York)                                      Tel: +1 (212) 687 8080     
 Jonathan Doorley / Jennifer Stroud (London)                                  Tel: +44 (0) 203 178 8914  
 Catlin                                                                                                  
 William Spurgin (Investor Relations)                                         Tel: +44 (0) 207 458 5726  
 James Burcke (Media Relations)                                               Tel: +44 (0) 207 458 5710  
 J.P. Morgan Cazenove (financial adviser and corporate broker to Catlin)                                 
 Conor Hillery                                                                Tel: +44 (0) 207 742 4000  
 Robert Thomson                                                               Tel: +44 (0) 207 742 4000  
 Mike Collar                                                                  Tel: +44 (0) 207 742 4000  
 Evercore (financial adviser to Catlin)                                                                  
 Andrew Sibbald                                                               Tel: +44 (0) 207 653 6000  
 Stuart Britton                                                               Tel: +1 (212) 857 3100     
 Neil Bhadra                                                                  Tel: +44 (0) 207 653 6000  
 Barclays(financial adviser and corporate broker to Catlin)                                              
 Jim Renwick                                                                  Tel: +44 (0) 207 623 2323  
 Kunal Gandhi                                                                 Tel: +44 (0) 207 623 2323  
 Michael Lamb                                                                 Tel: +44 (0) 207 623 2323  
 Stuart Ord                                                                   Tel: +44 (0) 207 623 2323  
 Maitland (PR adviser to Catlin)                                                                         
 Liz Morley                                                                   Tel: +44 (0) 207 379 5151  
 
 
Morgan Stanley & Co. International plc, which is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct Authority and
Prudential Regulation Authority in the United Kingdom, is acting as joint
financial adviser to XL and no one else in connection with the Acquisition, and
will not be responsible to anyone other than XL for providing the protections
afforded to clients of Morgan Stanley & Co. International plc nor for providing
advice in relation to the Acquisition. Neither Morgan Stanley & Co.
International plc nor any of its subsidiaries, branches or affiliates owes or
accepts any duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract, in tort, under statute or otherwise) to any
person who is not a client of Morgan Stanley & Co. International plc in
connection with this announcement, any statement contained herein or otherwise.

Goldman Sachs International, which is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the Prudential
Regulation Authority in the United Kingdom, is acting as joint financial adviser
to XL and no one else in connection with the Acquisition and the other matters
referred to in this announcement. In connection with the Acquisition and any
other such matters, Goldman Sachs International, its affiliates and its and
their respective partners, directors, officers, employees and agents will not
regard any other person as their client, nor will they be responsible to anyone
other than XL for providing the protections afforded to their clients or for
giving advice in connection with the Acquisition or any other matter referred to
herein.

J.P. Morgan Cazenove, which is authorised and regulated by the Financial Conduct
Authority, is acting as joint financial adviser to Catlin and no one else in
connection with the Acquisition and will not be responsible to anyone other than
Catlin for providing the protections afforded to its clients or for providing
advice in connection with Acquisition, the contents of this announcement or any
matter referred to in this announcement.

Evercore, which is authorised and regulated by the Financial Conduct Authority,
is acting as joint financial adviser for Catlin and no one else in connection
with the matters referred to in this announcement and will not be responsible to
anyone other than Catlin for providing the protections afforded to its clients
or for providing advice in relation to the matters referred to in this
announcement.

Barclays, which is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential Regulation
Authority, is acting exclusively for Catlin and no one else in connection with
the Acquisition and will not be responsible to anyone other than Catlin for
providing the protections afforded to its clients or for providing advice in
relation to the Acquisition or in relation to the contents of this announcement
or any transaction or any other matters referred to herein.

The City Code on Takeovers and Mergers

By virtue of its status as a Bermuda incorporated company, the Code does not
apply to Catlin.Catlin has incorporated certain takeover-related provisions into
its Bye-Laws but these do not provide Catlin Shareholders with the full
protections offered by the Code and enforcement of such provisions are the
responsibility of Catlin, not the Panel. Accordingly, Catlin Shareholders are
reminded that the Panel does not have responsibility, in relation to Catlin, for
ensuring compliance with the Code and is not able to answer shareholders`
queries.Catlin and XL have agreed certain matters regarding the application of
the Code to the Acquisition, and the terms of that agreement are summarised in
the following announcement.

In particular, public disclosures consistent with the provisions of Rule 8 of
the Code (as if it applied to Catlin) should not be e-mailed to the Panel, but,
as described below, released directly through a Regulatory Information Service.

Further Information

This announcement is for information purposes only and is not intended to and
does not constitute, or form any part of, an offer to sell or an invitation to
purchase or subscribe for any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Acquisition or otherwise, nor shall
there be any sale, issuance or transfer of securities of XL or Catlin in any
jurisdiction in contravention of applicable law.The Acquisition will be made
solely pursuant to the terms of the Circular, which will contain the full terms
and conditions of the Acquisition, including details of how to vote in respect
of the Acquisition and accompanied by forms of proxy for use at the Court
Meeting and at the General Meeting. Any decision in respect of, or in response
to, the Acquisition should be made only on the basis of the information in the
Circular and the Irish Prospectus. Catlin Shareholders are advised to read the
Circular, the Irish Prospectus and any other formal documentation published in
relation to the Acquisition carefully, once it has been published or dispatched.

This announcement does not constitute a prospectus or a prospectus equivalent
document.

Whether or not Catlin Shares are voted at the Court Meeting or the General
Meeting, if the Acquisition becomes effective, all Catlin Shares will be
cancelled pursuant to the Acquisition.

This announcement has been prepared for the purpose of complying with Bermuda
and English law and the Listing Rules and the information disclosed may not be
the same as that which would have been disclosed if this announcement had been
prepared in accordance with the laws of jurisdictions outside the United Kingdom
and Bermuda.

Notice to U.S. Holders of Catlin Shares

The Acquisition relates to the shares of a Bermuda company and is being made by
means of a scheme of arrangement provided for under the Bermuda Companies Act.
The transaction, implemented by way of a scheme of arrangement is not subject to
the tender offer rules or the proxy solicitation rules under the U.S. Securities
Exchange Act of 1934, as amended. Accordingly, the Acquisition is subject to the
disclosure requirements and practices applicable to a scheme of arrangement
involving a target company in Bermuda listed on the London Stock Exchange and
applicable to the issuance of buyer shares under the laws of the Republic of
Ireland, which differ from the disclosure requirements of United States tender
offer and proxy solicitation rules. If, in the future, XL exercises its right to
implement the Acquisition by way of a Bermuda Merger or by way of a Takeover
Offer and determines to extend the Takeover Offer into the United States, the
Acquisition will be made in compliance with applicable United States laws and
regulations.

The New XL Shares to be issued pursuant to the Acquisition have not been
registered under the U.S. Securities Act, and may not be offered or sold in the
United States absent registration or an applicable exemption from the
registration requirements of the U.S. Securities Act.The New XL Shares to be
issued pursuant to the Acquisition will be issued pursuant to the exemption from
registration provided by Section 3(a)(10) under the U.S. Securities Act.If, in
the future, XL exercises its right to implement the Acquisition by way of a
Takeover Offer, a Bermuda Merger or otherwise in a manner that is not exempt
from the registration requirements of the U.S. Securities Act, it will file a
registration statement with the SEC that will contain a prospectus with respect
to the issuance of New XL Shares.In this event, Catlin Shareholders are urged to
read these documents and any other relevant documents filed with the SEC, as
well as any amendments or supplements to those documents, because they will
contain important information, and such documents will be available free of
charge at the SEC`s website at www.sec.gov or by directing a request to XL`s
contact for enquiries identified above.

Neither the SEC nor any U.S. state securities commission has approved or
disapproved of the New XL Shares to be issued in connection with the
Acquisition, or determined if this announcement is accurate or complete.Any
representation to the contrary is a criminal offence in the United States.

XL and Catlin are incorporated under the laws of Ireland and Bermuda,
respectively. In addition, some of their respective officers and directors
reside outside the United States, and all or much of their assets are or may be
located in jurisdictions outside of the United States. Therefore, investors may
have difficulty effecting service of process within the United States upon those
persons or recovering against XL, Catlin or their respective officers or
directors on judgments of United States courts, including judgments based upon
the civil liability provisions of the United States federal securities laws. It
may not be possible to sue XL or Catlin or their respective officers or
directors in a non-U.S. court for violations of the U.S. securities laws. There
is also doubt as to enforceability in Ireland and in Bermuda, in original
actions or in actions for enforcement, of the judgments of U.S. courts, based on
the civil liability provisions of U.S. federal securities laws. In particular,
there is no treaty between Ireland and the United States providing for the
reciprocal recognition and enforcement of foreign judgments, and there is no
treaty in force between the United States and Bermuda providing for the
reciprocal recognition and enforcement of judgments in civil and commercial
matters.

Overseas Shareholders

The laws of the relevant jurisdictions may 

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