XL Expects Increased Oversight From Global Regulators After Catlin Deal

XL Group plc, the insurer that agreed to buy Catlin Group Ltd. for about $4 billion, said it faces a risk label after the deal that could lead to increased oversight from global regulators.

“Following the completion of the proposed acquisition of Catlin, we believe that we would meet the criteria to be designated” an internationally active insurance group (IAIG), the Dublin-based insurer said on Wednesday (February 25), in its annual filing to the U.S. Securities and Exchange Commission.

The Financial Stability Board, a global group of regulators and central bankers that monitors systemic risks, has directed the International Association of Insurance Supervisors to create criteria for the IAIG label. The purchase of Bermuda-based Catlin will increase XL’s role in specialized lines, such as covering aviation and artwork, as Chief Executive Officer Mike McGavick focuses on commercial clients.

If XL receives the designation after the deal, “we may become subject to a proposed international capital standard and enhanced regulatory supervision,” according to the filing.

–With assistance from Yalman Onaran and Zachary Tracer in New York.