Trenwick believes that the additional size will make it a stronger competitor in the reinsurance market. The Hamilton, Bermuda-based insurer should expand Trenwick's product line. LaSalle specializes in the sale of property catastrophe excess of loss reinsurance, which typically has a higher margin than much of Trenwick's existing operations. The deal provides an opportunity for geographic expansion, establishing Trenwick's presence in the Bermuda market. The transaction should produce tangible financial advantages for the company.
Management also expects the deal to be accretive for existing shareholders of both companies.
In addition to expense savings, future earnings should be boosted by the amortization of negative goodwill that the company expects to book on the transaction. For Trenwick, the transaction is a logical extension of its existing acquisition strategy. Over the past several years, the company has employed acquisitions to enter new markets and expand existing product lines.