Business Moves

January 10, 2010

Aon Risk, Allied North America

Aon Risk Services, the risk management and insurance brokerage business of Aon Corp., said it has agreed to acquire Allied North America, one of the largest independent surety and construction insurance brokerage firms in the U.S. Financial terms were not disclosed. Bill Marino, current chairman of Allied, will assume the role of president of Aon’s global construction business and vice chairman of Aon Construction Services Group, post-acquisition.

Steve McGill, chairman and chief executive officer of Aon Risk Services, said the deal “reinforces” Aon’s already-strong position in the construction sector.

The parties said that their combination will result in a construction entity with more than $3 billion in premium volume and 750 construction experts in more than 26 offices globally. They said the new partnership has more than 3,000 contractors and project owners, with a retention rate of 97 percent, and will offer products across all major lines including in public-private partnerships, builders’ risk, residential, and technical services.

Allied North America is based in Jericho, New York. It was founded in 1979 with a singular focus on the construction sector. With more than $850 million in property/casualty premiums in 2008, it ranks seventh in Insurance Journal’s list of top privately-held independent insurance agencies.

AIG, Chartis

American International Group Inc. has halted efforts to sell a stake in Chartis, as Chief Executive Robert Benmosche focuses on expanding the property and casualty unit, a person familiar with the situation told Reuters.

The move is consistent with Benmosche’s plan to rebuild AIG, as Chartis is seen as core to the insurer, the source said.

AIG, which the U.S. government had to prop up with $180 billion in taxpayer funds, had earlier planned to sell a stake of up to 20 percent in Chartis through either an initial public offering or transactions with private investors.

The company renamed the unit Chartis in July. But a Chartis initial public offering was still some time away. That IPO was seen as third in line, after AIG’s American International Assurance and American Life Insurance Co life insurance units, the source said.

The insurer is still working on its IPO plans for those two units, the source said.

Benmosche, who this summer became the fourth person to take over as AIG CEO since June 2008, has slowed down divestitures as he oversees a broad restructuring to pay back the government.

AIG declined to comment. The source requested anonymity because the discussions are not public.

Wells Fargo, iLeader

Wells Fargo Insurance Services, Inc. has acquired iLeader Risk Management Solutions, a single office, insurance brokerage located in Tampa, Fla. Terms were not disclosed.

iLeader’s Michael Ortoll, managing principal and CEO; Barbara Hoffman, account executive; and Oriana Collins, account manager, will join Wells Fargo Insurance Services.

iLeader provides risk management and insurance brokerage to healthcare, professional employee organization/staffing, transportation, retail, hospitality and private equity firms.

Marsh, NIA Group

Marsh & McLennan Agency has acquired The NIA Group, one of the largest independent insurance agencies in the Northeast. Terms were not released.

Paramus, New Jersey-based NIA has annual revenue of $62 million, 400 employees and offices in New Jersey, New York, Connecticut and Florida. The acquisition also includes the New York City office of Kornreich-NIA.

The acquisition provides a large, northeast base for the 14-month-old Marsh & McLennan Agency, a subsidiary of mega-broker Marsh. It’s the second acquisition the company has made in recent months. The first, Houston-based Insurance Alliance, gave the company a major presence in the southwest. Marsh said it plans to use its agency to build a national business focusing on mid-sized companies.

Hanover Group, OneBeacon

Worcester, Mass.-based The Hanover Insurance Group Inc. entered into a renewal rights agreement with OneBeacon Insurance Group as part of its goal to strengthen its competitive position and expand in western states. Through the agreement, The Hanover expects to acquire access to as much as $400 million in OneBeacon small and middle market commercial business at renewal, including industry programs and middle market niches.

The transaction will expand The Hanover’s segment, niche and industry program business, adding nearly 20 established programs to its portfolio. The agreement was effective for renewals beginning Jan. 1, 2010.

In small commercial, the company plans to roll out product enhancements across more than a dozen programs, including apartments, contractors, manufacturers, restaurants, retail, human services, technology and others.

In the middle market, the company will offer new coverages in several segments, including brewers, cultural institutions, food industries, media, printers, retail, and professional services. It also plans to make enhancements in several others, including real estate, wholesalers, metal workers and plastics.

The company also said the transaction will enable it to build its market presence and field capability, especially in its western expansion and other growth states. In all, the company expects to sign up approximately new 200 independent agents and to write additional business with another 300 independent agents who represent both companies in the small and middle markets. It also expects to hire approximately 100 OneBeacon employees.

ThinkRisk

Plans are underway for the February 2010 launch of ThinkRisk Underwriting Agency in Kansas City, Mo.

Founded by insurance industry veterans Chad Milton, Leib Dodell and Debra McClenahan, ThinkRisk will offer underwriting and claims management in the converging areas of media, technology, advertising, privacy and network security, specializing in errors and omissions insurance.

Aon founder Patrick G. Ryan will serve as chairman; Milton, Dodell and McClenahan will run the day-to-day operations.

ThinkRisk will offer coverage backed by member companies of Great American Insurance Group. ThinkRisk’s founders believe that its target industries require specialty coverages that depart from the ordinary practices of standard property/casualty markets.

Grain Dealers, Main Street America

The Main Street America Group, based in Jacksonville, Fla., announced that Indiana-domiciled Grain Dealers Mutual Insurance Co. has been cleared to become an affiliate of the Jacksonville, Fla.-based super regional property/casualty insurance carrier.

The deal has been approved by the Indiana Department of Insurance and affirmed by policyholders of Grain Dealers Mutual. Financial terms were not disclosed.

Main Street will enter two states that are new to Main Street America – Indiana and Mississippi- and grow market share in several other Grain Dealers states where Main Street America already writes business, said Tom Van Berkel, Main Street America’s chairman, president and chief executive officer. The company will now write business in 24 states.

Florida OIR, Magnolia

Home insurer Magnolia Insurance Co. has been placed under administrative supervision by Florida insurance regulators who said it is in unsound financial shape and its president, H. James Irl, has resigned.

The Coconut Grove-based insurer voluntarily agreed to the supervision, which is to last 120 days from Dec. 14 but can be extended.

Magnolia will be restricted in the writing and renewing of business under the consent order with the Office of Insurance Regulation. It will also need OIR approval for any major transaction, asset transfer, reinsurance agreement, investment or management change.

The company has agreed to work with OIR to develop a “corrective plan of action” that could include being acquired.

Irl is prohibited from any management role.

The state action comes a few weeks after the insurer lost its rating from an actuarial firm, Demotech, for failure to submit current financials and proof of management changes.

Magnolia began doing business in April, 2008, with $20 million in capital and 100,000 policies shifted from Citizens.

Homeowners Choice, Citizens

State officials have authorized a private Florida insurer to accept 23,000 policies from the state-owned insurer, Citizens Property Insurance Corp.

Homeowners Choice, Inc. said the assumption of these policies represents a 44 percent increase from the its current 52,000 policies. State-backed Citizens is now Florida’s largest homeowners’ insurance provider with more than 1 million policies in force. The 23,000 policies are assumable under a take-out program that seeks to reduce the state’s risk exposure.

In October, the insurer was also selected by the state as the replacement insurer for 5,500 policyholders of American Keystone Insurance Co., when that company was placed into receivership. The state authorized Homeowners Choice to offer replacement coverage to those policyholders.

The insurer was also authorized to assume policies from Citizens in 2008.

Homeowners Choice writes homes, condominiums insurance and tenants’ insurance in Florida only. It has written about $100 million in premiums.

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