Business Moves

June 2, 2008

Main Street America, Great Lakes Casualty

The Main Street America Group, a regional property/casualty insurer based in Jacksonville, Fla. that writes business up and down the East Coast, is expanding to the Midwest.

The insurer said it has agreed to acquire Great Lakes Casualty Insurance Co., a Michigan-domiciled private passenger auto insurance carrier based in Grand Rapids, from Newco Financial Holdings Inc.

Great Lakes Casualty, founded by a group of independent agents in 1997, is currently represented by 107 independent agents throughout Michigan that are also investors in the company. In 2007, Great Lakes generated approximately $9.5 million in direct written premium in Michigan and has more than 6,300 policyholders.

The transaction, which has been approved by the boards of directors of both companies, is subject to regulatory approval and is expected to close in late summer 2008. Financial terms were not disclosed.

The company will remain branded as Great Lakes Casualty and continue to be based in Grand Rapids.

Tom Van Berkel, chairman, president and chief executive officer of MSA, said the move is part of a long-term strategy of geographic diversification to increase scale.

Great Lakes President Keith Fry will join Main Street America to oversee operations in Michigan and will report to Doug Eden, Main Street America’s senior vice president of field operations.

The Main Street America Group operates four property/casualty insurance carriers: NGM Insurance Co., Old Dominion Insurance Co., Main Street America Assurance Co. and MSA Insurance Co. MSA’s more than $850 million in direct premium is written exclusively by nearly 1,200 independent insurance agents. The 85-year-old company has regional offices in Jacksonville; Keene, N.H.; Richmond, Va.; and Syracuse, N.Y., and a claims reporting center in Auburn, Mass.

Brightway Insurance, Mathis Agency

Brightway Insurance of Jacksonville, Fla., recently acquired Mathis Insurance of Amelia Island, Fla. The acquisition tops off a year of expansion, during which Brightway added 10 new offices in seven cities throughout Florida.

Michael Tarzia will manage the new full service office, which is the first Brightway Insurance location in Nassau County.

In addition to the Amelia Island office, Brightway Insurance recently brought five new agency owners into the fold: Susan Bashant in Port St. Lucie, John Benezette in Daytona, Michael Ryan in St. Augustine, Jean DiMuzio in Punta Gorda, and Kevin Feuser in Port Charlotte.

Atlantic Specialty, ESL

Atlantic Specialty Lines of Pennsylvania, LLC, a subsidiary of Atlantic Specialty Lines Inc., has acquired the business assets of ESL, Inc.

ESL, which was a wholly-owned subsidiary of Penn National Insurance, operated as a wholesale insurance brokerage. Atlantic Specialty Lines operates as a wholesale brokerage, specializing in excess and surplus lines of insurance for retail agents.

ESL was established to provide non-standard products to complement the portfolio of Penn National Insurance’s standard products. Penn National Insurance “encourages its agents to continue placing business with Atlantic Specialty Lines of Pennsylvania,” according to the company.

ASL said it will be maintaining an office in Harrisburg, where ESL was located, and is retaining most of the ESL staff members, including George Ludwig, president of ESL. They will be joining Dianne Sprague and the existing ASL-PA staff.

Atlantic Specialty Lines was formed in 1996 by former executives of Markel Services Inc. The home office is in Richmond, Virginia, and it also has offices in Illinois, Florida and Pennsylvania.

PURE, South Carolina

Florida-based Privilege Underwriters Reciprocal Exchange expanded into South Carolina, according to its president and chief executive officer. PURE CEO Ross Buchmueller said the exclusively underwrites owners of high-value homes insured for more than $1 million.

PURE offers comprehensive coverage, including windstorm coverage, for large, well-built homes that meet the standards of the latest building codes. PURE also offers automobile, jewelry and art, personal-excess liability and watercraft coverage.

PURE selected Bobby Collins to run its South Carolina operations.

PURE is owned by its policyholders who pay 10 percent of their homeowners’ and watercraft premiums and 4 percent of their premium for all other policies for each of the first five years.

Berkshire Hathaway, Royal Bank of Scotland

U.S. investor Warren Buffett is not interested in bidding for Royal Bank of Scotland’s (RBS) insurance arm and expects fallout from the credit crunch to keep roiling financial markets, Reuters reported he said recently.

“I have ruled out doing anything with the RBS group, which says nothing about the group; I just made that decision,” he told a news conference.

Buffett said he still liked the insurance business in the United States, even if some favorable trends in recent years, particularly in car insurance, had begun to reverse.

“There is no way we can do as well in profits in 2008 and 2009 as we did in 2006 and 2007, but it is still a decent business,” he said.

Arthur J. Gallagher, Specialty Risk of Mo.

Itasca, Ill.-based Arthur J. Gallagher & Co. has acquired Specialty Risk, Inc. of Liberty, Mo. Terms of the transaction were not disclosed.

Established in 1994, Specialty Risk, Inc. is a retail insurance broker specializing in occupational accident insurance, corporate and fleet workers’ compensation, physical damage and non-trucking liability insurance for independent contractors, fleet and company drivers, and motor carriers in the transportation field.

Jamie Krisman and associates will continue to operate in their current Missouri location under the direction of Michael Henthorn, South Central regional manager for Gallagher’s retail brokerage.

Oracle, AdminServer

Software maker Oracle said it has agreed to acquire AdminServer, a Chester, Pa.-based provider of insurance policy administration software.

The move has some analysts predicting a wave of mergers among insurance technology firms.

Oracle said AdminServer’s product offering will become a core component of Oracle’s existing insurance industry portfolio and accelerate Oracle’s investment in the insurance industry. Oracle’s existing insurance products include Oracle Billing, Siebel Claims and Siebel CRM for Insurance.

AdminServer’s CEO Rick Connors is expected to lead a dedicated insurance business unit as general manager.

The transaction is expected to close in the first half of 2008. Financial details of the transaction were not disclosed.

Some analysts see the deal as likely to trigger other insurance software mergers.

“Although there have been dozens of acquisitions in and around this space in the past few years by financial and tactical investors, this is the first time in recent years that a top global software company has purchased a focused insurance software company with the explicit goal of expanding its footprint in the vertical,” commented Matthew Josefowicz, director of the insurance practice at Novarica, and co-author of a report, Insurance Software M&A Kicks Into High Gear: Oracle Buys AdminServer.

“This acquisition changes Oracle’s ‘permission to play’ in the insurance software space dramatically, and puts it into direct competition with the traditional providers of insurance vertical applications,” said co-author Chad Hersh, a principal in Novarica’s insurance practice.

Novarica’s report summarizes the positions of Oracle, Microsoft, IBM, SAP AG, Computer Sciences Corp., CGI, Accenture, Fiserv, Tata Consulting Services and others serving insurance.

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