Stock Prices: Commercial property/casualty insurer stocks have been relatively flat through the third quarter of 2007. Chubb Corp. (NYSE:CB) had the largest gains for the year, up a modest 3 percent.
M&A Activity: The sector appeared to take a month off at the beginning of the third quarter with no major domestic property/casualty insurer acquisitions in July. The largest deal of the month was a Bermuda reinsurer’s acquisition of a United Kingdom-based underwriter. Ariel Holdings Ltd. and Atrium Underwriting PLC announced that an agreement was reached on the terms of a cash offer under which Ariel will acquire all of the issued and to be issued shares of Atrium. Under the terms of the offer, Atrium shareholders will receive, for each Atrium share held, 365 pence in cash, which is approximately U.S. $7.41. The combination of Ariel and Atrium will create a broader underwriting platform, particularly in specialty lines, as well as an extended geographic capability and distribution network.
The fourth acquisition of the year involving a middle-market workers’ compensation insurer was announced in August. The shareholders of CompWest (CWI Holdings Inc.), a California-based workers’ compensation insurance company, have signed a definitive stock purchase agreement which will effectively sell the company to Accident Fund Insurance Co. of America (Blue Cross & Blue Shield of Michigan). CompWest was formed in 2004 by its executive management team and Trident III LP.
The middle-market workers’ compensation sector remained extremely active with two more deals announced in September. Rockhill Holding Co. reported they have entered into a definitive merger agreement under which Rockhill will acquire all the outstanding shares of RTW (Nasdaq:RTWI) stock for $12.45 per share in cash. After the merger, RTW will continue to operate as a separate wholly-owned subsidiary of Rockhill. The price of $12.45 represents a premium of 54 percent over the Nasdaq market price on Sept. 20, 2007, and higher than RTW stock has traded for the past five years or more. Separately, W.R. Berkley Corp. (NYSE:BER) announced the execution of a definitive agreement to acquire CGH Insurance Group, the owner of American Mining Insurance Co. American Mining, based in Birmingham, Ala., has specialized in providing insurance protection in the mining industry since 1989. As of June 30, 2007, American Mining had statutory surplus of $30.6 million and for the year ended Dec. 31, 2006, had approximately $36.7 million in gross premium written.
Associated Industries Services Inc., Capital City Holding Co. Inc., and Employers Direct Corp. have also been acquisition targets in the workers’ compensation sector this year.
Capital Raising: SPARTA Insurance Holdings Inc. announced the acquisition of American Employers’ Insurance Co., a 52 jurisdiction licensed company, from OneBeacon Insurance Group Ltd. (NYSE:OB). SPARTA also recently announced that it had closed its contractual arrangements for funding in the amount of $279.1 million of private equity capital. The private equity investment was led by Corsair Capital and included Goldman Sachs, York Capital Management, Primus Capital Funds, and KBW Capital Partners. SPARTA, located in Hartford, Conn., intends to underwrite property/casualty insurance for the specialty and alternative risk program marketplace.
Topics Mergers & Acquisitions Carriers Commercial Lines Workers' Compensation Business Insurance Property Casualty
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