Business Moves

Alliance Bank, Fredericksburg Insurance

Alliance Bankshares Corp., a community bank organization based in Chantilly, Va., said its subsidiary, Alliance Insurance Agency Inc., has acquired certain assets and liabilities of the Thomas Agency Inc., trading as Fredericksburg Insurance Group in a stock and cash transaction.

Jesse R. (Randy) Thomas Jr., president of Fredericksburg, will join Alliance as a senior vice president of the insurance subsidiary.

The transaction is expected to close in the second quarter of 2007.

Independence Blue Cross, Highmark

Pennsylvania’s two largest health insurers are in talks for a possible merger, according to a memo one of the companies’ chief executives sent to employees reported by The Associated Press.

Joe Frick, president and chief executive of Independence Blue Cross in Philadelphia, said the company has been in talks with Highmark Inc. for the past year. Frick cautioned that there is no certainty the talks will result in a merger.

A spokesman for Highmark said the two insurers have been in discussions for months.

Independence Blue Cross serves about 3.4 million members, while Highmark has over 4 million. Combined, the two command over 53 percent of the state’s insurance market.

Hub, Apax Partners

Chicago-based insurance broker Hub International Limited reported that the agreement under which it is being bought by funds advised by Apax Partners together with Morgan Stanley Principal Investments has been amended to increase the consideration to be received by Hub’s shareholders to $41.50 in cash per common share from $40.00. The increase in consideration followed receipt by Hub of competing proposals.

In the event the amended agreement is terminated under specified circumstances, Hub will be obligated to pay a break-up fee of 3 percent of the equity value of the transaction ($53 million).

The transaction is expected to be completed toward the end of the second quarter of 2007 and is subject to shareholder approval, Canadian court approval, and other regulatory approvals including merger notification filings in the United States and Canada, as well as customary closing conditions.

Wal-Mart

Wal-Mart Financial Services has withdrawn its controversial application seeking to start its own bank. The retailer has been one among 14 companies including the Home Depot with applications before the Federal Deposit Insurance Corp. to establish what are called industrial loan corporations, or ILCs. In January, the FDIC delayed a decision on the pending applications.

Various banks, unions and consumer organizations have opposed letting giant retailers into the loan business out of concern they would drive out local financial institutions.

Wal-Mart President Jane Thompson said her firm decided to withdraw rather than wait any longer to learn the fate of its application, which it first filed in 2005. “Unlike dozens of prior ILC applications, Wal-Mart’s has been surrounded by manufactured controversy since it was submitted nearly two years ago,” she claimed.

C.V. Starr, Chubb

C. V. Starr & Co. Inc. has organized a global accident and health company. To be headquartered in Greenwich, Conn., Starr Global Accident & Health Insurance Agency, LLC has established a strategic relationship with The Chubb Corp. Through a network of program managers, the agency will underwrite employer stop loss insurance on behalf of the Chubb Group as its first product.

“Starr Global Accident & Health is another step in our continuous building of a business of specialized insurance products and services which is the hallmark of C. V. Starr,” commented Maurice R. Greenberg, chairman and CEO of C. V. Starr & Co., Inc. in New York.

Axa Group, Kyobo Auto

France’s Axa Group reached an agreement with Kyobo Life to acquire its 75 percent stake in Kyobo Auto, a major South Korean direct automobile insurer, which has more than 800,000 clients, revenues of $370 million and a market share above 30 percent.

Ark Syndicate, Lloyd’s

Ark Syndicate Management opened for business as Lloyd’s newest managing agency. Ark will assume the management of Syndicate 4020 with a 2007 capacity of $222 million.

The new Syndicate will underwrite a composite account to include casualty reinsurance, hull and cargo, marine aviation and transit reinsurance, energy, war and property direct and facultative, property reinsurance and marine and energy liability”, said Lloyd’s.

Former Head of Insurance at Aspen Insurance Holdings Ian Beaton serves as the company’s CEO. David Foreman, who has more than 30 years’ experience at Lloyd’s, will be Ark’s chief underwriting officer.

Aquiline Capital Partners, a private equity investment firm established by former Marsh Chief Executive Jeff Greenberg, is providing Ark’s capitalization.

CastlePoint

Bermuda-based CastlePoint Holdings, Ltd. held its initial public offering of 7,682,238 common shares on March 23. The company sold 7,562,738 shares and existing shareholders sold 119,500 shares at $14.50 per share. The IPO raised approximately $111 million.

CastlePoint’s shares began trading on the NASDAQ Exchange on March 23 under the trading symbol “CPHL”. CastlePoint said it has also granted the underwriters the option to purchase up to 1,134,410 additional shares to cover over-allotments, if any.

The New York-based Tower Group Inc. entered into a “strategic relationship” with CastlePoint last year (See IJ web site April 5, 2006). It became the sole shareholder of its subsidiary CastlePoint Re in February after it invested $15 million in the company. Tower also has an 8.6 percent stake in CastlePoint.

MaxRe

Bermuda-based Max Re Capital Ltd. announced that it has received regulatory approval from the Delaware Department of Insurance to acquire a U.S.-based excess and surplus lines company.

Max Re (which is also in the process of changing its name to Max Capital Group Ltd.) announced plans for the new venture late last year (See IJ web site Dec.15, 2006). The company will be named Max Specialty Insurance Co. and will be based in Richmond, Virginia, with regional offices in Atlanta, San Francisco and Philadelphia.

Max Re said the “proposed new Max subsidiary is expected to complement the company’s existing insurance and reinsurance operations based in Bermuda and Dublin, Ireland.” It is headed by Stephen J. Vaccaro, Jr. as president and CEO.

“It is intended that the new Max subsidiary will operate across two divisions, Brokerage and Managing General Agency” the company said.

Max expects to close the transaction to acquire the excess and surplus lines company shortly.

Equitas, Berkshire Hathaway

Equitas, the run-off vehicle established by Lloyd’s in 1996 to handle 1992 and prior years’ non-life liabilities, has completed its reinsurance transaction with National Indemnity Co., a member of the Berkshire Hathaway group of insurance companies. The transaction was first announced last year (See IJ web site Oct. 20, 2006).

Equitas said that as a result National Indemnity now reinsures all Equitas’ liabilities; provides a further $5.7 billion of reinsurance cover to Equitas; and has acquired Equitas Management Services Limited. The current management and employees of Equitas Management Services Limited will continue to conduct the run-off of Equitas’ liabilities.

The company said that the transaction has been approved by the Financial Services Authority (FSA) and the Equitas trustees. The New York Insurance Department has approved various amendments to the Equitas American Trust Fund that were required to implement this transaction. In addition, the Corporation of Lloyd’s has received approval in an Extraordinary General Meeting for its $176.7 million contribution to Equitas which forms part of the deal.

As part of the approval process the FSA also sanctioned the payment of a return premium of $98 million to the individual Names reinsured by Equitas.