Mike McGavick believes XL Group is poised for strong earnings growth in the coming years as a stand-alone company — and he is not surprised of reports of takeover interest from larger insurers.

A Bloomberg report last week suggested that German giant Allianz was considering making a bid for the Bermudian-based insurer and reinsurer, sending XL’s shares shooting nearly 13 per cent higher.

Mr McGavick, XL’s chief executive officer, said: “You just had a big trade with similar protagonists, so people look at that and say oh, there must be more of that happening. We have M&A in the air.”

Last month, American International Group agreed to buy Bermudian reinsurer Validus Group in a $5.6 billion all-cash deal.

The Bermuda market is seen by many as a likely place for more merger and acquisition activity, stimulated by large catastrophe losses bringing down stock prices and also the impact of US tax reform.

Speaking in New York at the Bank of America Merrill Lynch 2018 Insurance Conference, Mr McGavick said a bid for XL would be considered by the board, provided it enhanced shareholder value. But this was simply their fiduciary responsibility as a publicly traded company, he added.

Regardless of takeover bids, Mr McGavick saw a bright future for XL, saying that the benefits of a clampdown on expenses, organic growth and an uptick in primary insurance rates would become apparent in earnings over the next couple of years.

“We have a lot of upside and we believe we are going to deliver,” Mr McGavick said.

The CEO added the company was changing the mix of its reinsurance business to veer towards less volatile risks.

On Britain’s impending departure from the European Union, Mr McGavick said he believed XL was well positioned to deal with potential upheavals, but he was hoping for the “very smoothest possible Brexit”.

“I do find it [Brexit] a very curious decision,” Mr McGavick said. “I think it destabilises something that was working for the UK.”

He added that XL’s main London platform, because it was structured as a societas Europaea (SE) meant that it could be “moved on a dime”. XL’s main European business is already based in Dublin.

“We can just take that core London platform, upon which our global business hangs, and move it up to Dublin,” Mr McGavick added.

He added that he found it frustrating that financial regulators and politicians were paying so much attention to the Brexit ramifications for banks, while the insurance industry seemed to be “an after thought”.