Aon, Old Republic Insurance Co.
Chicago-based Aon has taken further steps to exit the property and casualty underwriting business by moving to sell its Construction Program Group (CPG). Aon also announced that it would strengthen reserves for its remaining specialty property and casualty business by approximately $100 million , while continuing to exploring the sale of the remaining underwriting business.
Aon signed a letter of intent to sell its CPG, a managing general underwriter, to Old Republic Insurance Co. for cash consideration of $85 million. The transaction also includes the transfer of approximately $300 million of unearned premium and claim reserves currently on the books of Virginia Surety Co., Inc., which relate to business previously written through CPG. The sale of CPG and previously announced pending sale of Aon Warranty Group and Virginia Surety — part of the strategic exit of underwriiting — are anticipated to be completed in the fourth quarter of 2006.
Aon has placed the balance of its specialty business related to Aon Warranty Group, Virginia Surety and CPG in run-off.
Aon officials aid the exiting of the underwriting business would permit the firm to focus on its core businesses, including brokerage.
USI Holdings Corp. received an inquiry from a private equity firm interested in acquiring all of the outstanding common stock of the company. In response, the company’s board of directors formed a special committee consisting of outside directors to review the proposal and consider all of the company’s options.
Lazard Freres & Co. LLC and Dewey Ballantine LLP have been engaged to assist in the review. No details of any offer were disclosed.
National Indemnity, Equitas
Equitas, the Lloyd’s vehicle set up in 1996 to run off asbestos and environmental claims, and Berkshire Hathaway’s subsidiary National Indemnity reached an agreement in principle where National Indemnity would acquire Equitas.
The deal, which is subject to approval from Lloyd’s and the U.K.’s Financial Services Authority, propsoes a structure in which National Indemnity will undertake to reinsure all Equitas’ liabilities; provide up to a further $7 billion of reinsurance cover to Equitas; take on the staff and operations of Equitas and conduct the run-off of Equitas’ liabilities.
Protective Insurance, Paladin Catastrophe
Protective Insurance Co., a subsidiary of Indianapolis-based Baldwin & Lyons Inc., announced that it has entered into an agreement with newly formed Paladin Catastrophe Management to produce property catastrophe reinsurance in the U.S.
The firm said Paladin Catastrophe Management will solicit and underwrite selected business on behalf of Protective. The reinsurance operations will be managed by David Ingrey from offices in Chester, N.J. The operation will operate as a broker market only, targeting regional catastrophe business in the U.S., other than Florida hurricane and California earthquake exposed business. It will also consider specific terrorism reinsurance, as well as property per risk and property aggregate stop loss programs.