XL Group Plc Chief Executive Officer Mike McGavick said employees who are worried about disruption from his company’s planned purchase of Catlin Group Ltd. should think twice about jumping ship.
Other reinsurance deals, including last month’s agreement by Axis Capital Holdings Ltd. to merge with PartnerRe Ltd., have created some “turmoil” in the market, McGavick said on a conference call.
“If you thought your situation was the only difficult situation around, and therefore it became tempting to go to some other organization and feel safer, I don’t think that mentality is going to be very much in play right now,” McGavick said late Monday. “It’s going to be difficult to go somewhere where you’re safe from all of this, because I think it’s going to take a while to play out.”
Consolidation is accelerating in the markets for reinsurance and specialty commercial coverage as companies seek to gain scale and diversify their risks. RenaissanceRe Holdings Ltd. struck a deal in November to purchase Platinum Underwriters Holdings Ltd.
McGavick said last month after announcing the deal to purchase Bermuda-based Catlin that he will cut jobs amid the integration. He said on Monday that the combined insurer would seek to retain the most dedicated employees.
“You’re probably going to want to make sure you put your best foot forward, and that includes staying focused and delivering,” he said. “People are, in a sense, showing us that they have the ability to perform under difficult circumstances. That’s an important credential that they are advertising to us and to their future colleagues.”
XL rose 13 cents to $35.34 at 10 a.m. in New York, extending its gain for the year to about 2.8 percent. The Dublin-based company reported on Monday that fourth-quarter operating profit climbed 2.5 percent to $293.9 million.
Validus Holdings Ltd. CEO Ed Noonan said in a Jan. 30 conference call that the mergers create dislocations that could provide opportunities for his company to recruit underwriters.
“I don’t mean that in a predatory way, I just think that’s the natural order of things,” he said on the call.