Alleghany Completes Acquisition of R&SA’s RSUI

July 2, 2003

Alleghany Corporation and the U.K.’s Royal & Sun Alliance announced that they have successfully completed the sale of Royal Specialty Underwriting, Inc., R&SA’s Atlanta, Georgia-based excess and surplus underwriting agency subsidiary to Alleghany for approximately $115 million.

Alleghany acquired RSUI through its wholly owned subsidiary, Alleghany Insurance Holdings LLC. The deal includes “renewal rights to the ongoing business underwritten by RSUI for insurance affiliates of Royal & Sun Alliance and the related net unearned premium reserve portfolio of approximately $320 million,” said a company announcement, but “excludes loss reserves associated with business previously underwritten by RSUI for insurance affiliates of Royal & Sun Alliance.”

Alleghany also said that “to support future business to be underwritten by RSUI,” it has acquired Underwriters Reinsurance Company from Swiss Re America Holding Corporation. URC is admitted in 50 states. Alleghany said it had capitalized the company “at approximately $500.0 million,” and referred to the financial strength rating of A (Excellent) assigned to URC by A.M. Best (See related article in “East”)

Alleghany also noted that “URC expects to acquire Landmark American Insurance Company, a surplus lines insurance company, from Royal & Sun Alliance during the third quarter to write non-admitted or surplus business underwritten by RSUI.” Once the transactions have been completed Alleghany plans to rename URC as “RSUI Indemnity Company” and to rename RSUI as “Resurgens Specialty Underwriting, Inc.” It also said that “Pending satisfaction of regulatory rate and form filings by URC and the acquisition of Landmark, RSUI will underwrite on policies issued by insurance affiliates of Royal & Sun Alliance and fully reinsured by URC.”

The bulletin noted: “RSUI underwrites specialty insurance coverages through wholesale brokers and producers. RSUI underwritten business ranks in the top 11 excess & surplus underwriters based on 2001 net premiums written and has consistently generated underwriting profits since its inception in 1988. Premiums related to RSUI underwritten business are evenly split between the admitted and non-admitted insurance markets, with approximately 68.0% of total premiums written for specialty property coverages. For the year-ended December 31, 2002, RSUI underwritten business had generated net written premiums of $515.0 million, and for the first quarter of 2003, net written premiums of $162.0 million.

“Management and the approximately 280 employees of RSUI, based in Atlanta and Sherman Oaks, California, will continue with the newly formed RSUI Group, Inc. James Dixon will continue to serve as the Chairman of RSUI, E.G. Lassiter will continue as the President and Dave Leonard will continue as Executive Vice President.”

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