The Hartford has agreed to purchase Northern Homelands Co., the holding company of excess and surplus lines insurer Maxum Specialty Insurance Group, for $170 million in cash.
According to the announcement, Maxum will maintain its brand and wholesale distribution model and will be managed as a separate unit within The Hartford’s Small Commercial business. The parties said that all Maxum employees will be offered continued employment at close and Maxum will remain headquartered in Alpharetta, Georgia and maintain its regional offices in Chicago and Philadelphia.
Maxum Specialty Insurance Group, founded in 2003, is comprised of Maxum Indemnity Co. and Maxum Casualty Insurance Co. Maxum Indemnity is an authorized non-admitted excess and surplus lines insurer in 49 states; the District of Columbia; and the territories of Puerto Rico and the U.S. Virgin Islands. Maxum Casualty is an approved admitted carrier in 50 states and the District of Columbia. Both companies are domiciled in Delaware.
Maxum wrote $157 million in premium in 2015, up from $152 million in 2014. For 2015, it reported a combined ratio of 95.5, improved from 105.4 in 2014.
Its biggest states for business include California (12 percent), Texas (12 percent), Florida (11 percent) and New York (10 percent).
Its products include excess and umbrella, general liability, directors and officers liability, fiduciary liability, employment liability, lawyers, allied medical, architects and engineers, miscellaneous errors and omissions, auto physical damage and motor truck cargo.
Maxum writes business through a select group of primarily independent wholesale brokers and general agents. The group is rated A-VIII by A.M. Best. Its statutory surplus exceeds $114.6 million. The purchase price represent 1.5 times Maxum’s 2015 surplus and 21 times Maxum’s 2015 statutory earnings of $8 million.
“Today’s acquisition supports The Hartford’s strategy to profitably grow our business by investing in the product, underwriting and distribution capabilities that are making us a broader and deeper risk player,” said The Hartford’s President Doug Elliot. “The addition of Maxum, a well-respected excess and surplus lines company, accelerates our efforts to build upon our market-leading position in Small Commercial by expanding our product offerings and capabilities.”
The Hartford said Maxum will help it penetrate larger risks within the small commercial segment by providing more general liability and property coverages.
Last July, Hartford CEO Christopher Swift told analysts said that any acquisition The Hartford might entertain would be one that adds to its product lines and helps it capture more market share in the U.S. as opposed to internationally. He said then that the company has flexibility to finance an acquisition should it find a deal that makes sense.
The deal will be structured as a merger between Northern Homelands and Hartford Fire. The Hartford said it does not expect any restructuring costs in the deal.
The transaction, which The Hartford said will not have a material impact on its financial results, is expected to close in the third quarter of 2016.