XL Group Plc said it would buy underwriter Catlin Group Ltd. for about 2.79 billion pounds ($4.22 billion), increasing the Dublin-based insurer’s share of business written in the Lloyd’s of London market to nearly 10 percent.

The deal is the latest in a string of European insurance mergers as the region’s 5,000 underwriters face stricter capital rules. Mergers usually make it easier for companies to cut expenses relative to assets, helping them to raise capital.

“We are forecasting that we will, at a minimum, have about $200 million in cost savings across the two organizations when they are combined,” XL Chief Executive Mike McGavick, who will head XL Catlin, said in an interview.

“That’s about 10 percent of the combined expenses of the company,” he added.

It is too early to say how many jobs will be cut, he said.

Catlin writes about 7.5 percent of all Lloyd’s premiums, making it the biggest syndicate on the market, while XL accounts for about 2 percent.

The offer of 388 pence in cash and 0.13 new XL share values each Catlin share at about 715.3 pence – a premium of 8.3 percent to the stock’s close on Thursday.

Shares in London-listed Catlin were trading at 708 pence in afternoon business, while XL shares were up 1.6 percent at $35.99 in early trading on the New York Stock Exchange.

Bermuda-based Catlin, which sells insurance for everything from flooding to kidnapping, said it would pay a final dividend of 22 pence, reversing a decision made in December to forego the payout after an approach from XL.

At the time, XL – which has a market value of more than $9 billion – had offered 2.53 billion pounds for Catlin.

Stephen Catlin, who founded the company that bears his name in 1984, told Reuters that some of Catlin’s investors had “showed a very clear preference” for the final dividend and to have the amount subtracted from the purchase price.

Catlin’s top investors include BlackRock Institutional Trust Co., Cantillon Capital Management and MFS Investment Management.

“This bid both highlights the attractions of Lloyd’s for external players and increases the scarcity value for the remaining companies,” Shore Capital analyst Eamonn Flanagan said in a research note.

Earlier this week, brokerage Westhouse Securities flagged Novae Group Plc and Lancashire Holdings Ltd. as the next possible Lloyd’s takeover targets. ($1 = 0.6612 pounds)

(Reporting by Richa Naidu in Bengaluru; Editing by Savio D’Souza and Ted Kerr)