Catalina Holdings (Bermuda) Ltd (Catalina) will acquire Sparta Insurance Holdings, Inc, the two companies have announced.

They have said that following the closing of the transaction, Catalina plans to place some of Sparta’s business into run-off and to transfer the speciality programme and risk transfer alternatives specialist’s alternative market business to Arch Insurance Company under a separate renewal rights agreement.

Catalina will acquire Sparta from cash at hand and a senior debt facility. The transaction, which is subject to regulatory approval, is expected to close in Q3 2014.

Chris Fagan, chairman and chief executive of Catalina, said: “The acquisition of Sparta adds significantly to our operations in the North East of the US, and follows quickly after our recent acquisition of Alea North America. Catalina will be gaining talented people with this transaction who will be able to help with our operations across the US.

“I am also pleased that a renewal rights agreement has been struck with Arch Insurance Company, under which some staff will continue writing the alternative markets business.”

Sparta stated: “We have carefully explored our strategic alternatives and have concluded that the Catalina transaction combined with the renewal rights sale is in the best interests of our stake holders. The alternative market customers and programme administrators will be offered an opportunity to transfer, along with some of the senior leadership team from Sparta, to Arch Insurance Company. We are committed to working with Catalina to assure a smooth completion of this transaction for all parties.”

Sparta predominantly focuses on in the United States.

A press release announcing the deal stated that at 31 December 2013, Sparta had total assets of $911 million, gross reserves of $495 million, net reserves of $309 million and shareholder equity of $201 million.

Catalina will acquire Sparta using cash at hand and a senior debt facility. The transaction, which is subject to regulatory approval, is expected to close in the third quarter of 2014.

This is Catalina’s 12th transaction since the business was established in 2005. The acquisition would bring Catalina’s total assets up to more than $2.9 billion.