Bermuda re/insurer Validus Holdings Ltd has agreed to acquire US insurer Western World Insurance Group, Inc for $690 million in cash.

Validus CEO Ed Noonan said last night that the combination with the Franklin, New Jersey-based Western World would realise “a key strategic goal”, while opening up opportunities for its Bermuda staff.

In a statement last night, Validus said Western World has a 50-year track record of profitability and is a pioneer in the binding authority business model.

Validus intends to have Western World operate as a stand-alone business within Validus led by its current management team and preserving the insurer’s name, strong brand equity and market reputation, the company said.

Under the terms of the transaction, Western World’s owners will receive $690 million in cash in exchange for 100 percent of the outstanding stock of Western World. At March 31 this year Western World’s book value was estimated to be $518.3 million. Validus intends to use existing funds for the transaction.

Mr Noonan said: “I am very pleased to announce that we have reached an agreement to acquire Western World Insurance Group, a US-based excess and surplus lines insurance company. This is an exciting opportunity for both companies and achieves one of Validus’ key strategic goals, namely the development of an onshore US insurance platform.

“We continue to think of ourselves as first and foremost a Bermudian company, and a great supporter of the Island. This acquisition supports our commitment to growth and continues to provide opportunity for our Bermuda staff and the wider community.”

In the company statement, Mr Noonan added: “Bringing together Validus, a leader in the short-tail insurance and reinsurance market, and Western World, with its excellent US distribution platform, outstanding management and industry leading technology, creates a franchise that will provide compelling products and services for our customers.”

Western World CEO Tom Mulligan said: “Joining Validus is a great outcome for Western World. Validus brings capital and expertise in short-tail classes of business which will advance the competitive advantages in all of our underwriting divisions. My colleagues and I look forward to working with Validus to provide additional products and capacity to our agents and customers.”

Validus anticipates the closing to take place on or about the end of the third quarter of 2014 and is subject to the obtaining of required regulatory approvals and the satisfaction of other customary closing conditions.

Greenhill & Co. is acting as financial advisor to Validus and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel. For Western World, Goldman, Sachs & Co. is acting as financial advisor and Sullivan & Cromwell LLP and Morrison Cohen LLP are acting as legal counsel.