On Tuesday,
The Goldman Sachs Group Inc.
(
GS
) completed the purchase of Ariel Reinsurance's Bermuda-based
insurance and reinsurance operations from Ariel Holdings Ltd. The
terms of this deal were undisclosed.
Goldman will combine the acquired business with its existing
Lloyd's business. The combined entity will work as part of Goldman
Sachs Reinsurance Group (GSRG) with the brand name Ariel
Reinsurance (Ariel Re). GSRG covers the property and casualty
reinsurance business in London.
Founded in 2005, Ariel Holdings Ltd. provides a wide range of
property and casualty insurance and reinsurance products to
companies and policyholders across the globe. It focuses on
achieving above-average economic returns for the risks taken and
maintains adequate financial availability to meet the requirements
of underwriting businesses.
Managers at Ariel Re find the acquisition quite opportunistic.
They look forward to the combined business with superior
underwriting of track records at both. They also expect strong
performance to continue. However, the deal excludes Ariel's credit
and surety business operated at the Zurich branch office, and
Atrium Underwriting Group at
Lloyd's
(
LYG
).
As a part of deal, GSRG's Lloyd's syndicate will reinsure the
current business of Ariel Reinsurance. In the combined structure,
most of Bermuda-based Ariel Re's staff will remain employed.
The acquisition will expand Goldman's property and casualty
coverage, and the name of Ariel franchise will help the company to
serve its clients in a better way.
Through acquisitions and global expansions, Goldman is trying to
grab every opportunity to leverage its strong reputation in
corporate trust market. The expansion mode of the company is
mounting since the beginning of 2012.
The acquisition spree of Goldman indicates that the company is
moving ahead on the path of improving its financial position. Like
other Wall Street biggies such as
Bank of America Corporation
(
BAC
) and
JPMorgan Chase & Company
(
JPM
), the company has been buckled under the weakness in the wider
economy and the fundamental pressures on the banking sector.
Completion of deals like this will enable the bank to enjoy a
better position in the ongoing uncertain global economic scenario
compared to its peers.
Goldman currently retains a Zacks #3 Rank, which translates into
a short-term Hold rating. Considering the fundamentals, we also
maintain our long-term Neutral recommendation on the stock.
BANK OF AMER CP (
BAC
): Free Stock Analysis Report
GOLDMAN SACHS (
GS
): Free Stock Analysis Report
JPMORGAN CHASE (
JPM
): Free Stock Analysis Report
LLOYDS BANK GRP (
LYG
): Free Stock Analysis Report
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