Chicago-based Aon Corp. is acquiring UK-based broker Benfield Group Limited for about $1.75 billion. The price includes $6.55 (£3.50) per share in cash and assumption of $170 million (£91 million) of Benfield net debt.
The consideration represents a 29 percent premium to Benfield’s closing stock price on August 21, 2008, the last trading day prior to the announcement of the agreement.
Benfield is an independent reinsurance intermediary.
The company took its present form in 2001, when UK-broker Benfield Greig acquired Dallas-based E.W. Blanch Holdings Renamed Benfield, it is generally ranked as the third largest reinsurance broker.
Aon said it “intends to integrate the Benfield business with its existing reinsurance operations (Aon Re Global) and operate the division globally under the newly created Aon Benfield Re brand.
“This agreement reflects our ongoing efforts to ensure that Aon’s colleagues, capabilities and technology remain at the forefront of our industry and that we provide the best value for our clients,” stated Aon’s President and CEO Greg Case.
Grahame Chilton, Benfield’s CEO, will become vice chairman of Aon Group, reporting to Case.
Aon said the two companies “reinsurance operations are highly complementary,” and that both firms have been targeting “developing markets around the world…including Asia, Central and Eastern Europe, Africa and Latin America.”
In terms of cost savings, Aon said the transaction is expected to generate approximately $122 million (£65 million) in annual cost savings fully phased-in in 2011, primarily from shared administrative and support services across both Aon Re Global and Benfield.
The transaction is expected to close by the end of 2008, subject to customary closing conditions and regulatory approvals as well as approval by Benfield shareholders.
Eastern Insurance, Kittredge Agency
Natick, Massachusetts-based Eastern Insurance Group has acquired Northborough, Mass.-based Kittredge Insurance Agency Inc.
Eastern Insurance, part of Eastern Bank, said the acquisition increases its customer base west of Boston, where it already has eight locations.
In all, Eastern Insurance has 26 locations in eastern and central Massachusetts, parts of Connecticut and in New Hampshire.
Hope Aldrich, president and CEO of Eastern Insurance, said the firm will retain the Kittredge’s employees, and Francis J. Kittredge, president of Kittredge Insurance, will remain with Eastern Insurance in a senior executive position.
Eastern Insurance says it is the largest personal lines insurance agency headquartered in Massachusetts, based upon the number of agency locations.
Hanover, AIX Holdings
The Hanover Insurance Group will acquire Windsor, Connecticut-based specialty insurer AIX Holdings Inc., in a move designed to bolster The Hanover’s product and service capabilities for its agents, the company said.
AIX Holdings focuses on underwriting and managing program business, utilizing alternative risk transfer techniques. It has developed general liability, workers’ compensation, property and auto liability programs for a range of underserved markets where there are specialty coverage or risk management needs.
The planned acquisition of AIX Holdings follows two other recent acquisitions by The Hanover.
In September 2007, The Hanover acquired Professionals Direct Inc., which specializes in professional liability insurance for small- and mid-sized law practices.
Earlier this year, the company also purchased Verlan Holdings Inc., which provides insurance for manufacturers and distributors of chemical-related products.
Under terms of the acquisition, The Hanover will acquire all of the stock of AIX, although a monetary value for the deal was not given.
The transaction is subject to regulatory reviews and approval, and is expected to close during the fourth quarter.
Brown & Brown, Advanced Insurance Concepts
The assets of Advanced Insurance Concepts, Inc., of Bensalem, Pennsylvania, has been acquired by a subsidiary of Florida-based Brown & Brown, Inc.
Advanced Insurance Concepts, with annual revenues of approximately $2 million, is a general agency that specializes in individual and group employee benefit insurance products and services on behalf of brokers in Delaware, New Jersey, and Pennsylvania. The agency serves as the general agent for several health insurance providers in the region.
Tony Schufreider, Sr., Anthony G. “Tony” Schufreider, Jr. and their staff will join Brown & Brown Consulting, a Brown & Brown profit center located in Philadelphia, under the leadership of Robert Cola.
Allianz Group, Fireman’s Fund Marine
Allianz Global Corporate & Specialty (AGCS), the industrial insurance arm of the Allianz Group, and Fireman’s Fund Insurance Co, an Allianz general insurance unit in the United States, are combining their marine insurance businesses.
The two Allianz subsidiaries will be merging their marine portfolios to create one unified global marine insurance organization under the AGCS brand. Leading the combined initiative out of New York will be Art Moossmann, who is responsible for specialty insurance, including marine, at Fireman’s Fund.
The AGCS marine business has underwriting hubs in key marine centers including New York; Toronto, Canada; Paris, Hamburg, Germany; London and Singapore. The global Allianz marine gross premiums total around $1.5 billion (of which AGCS will account for around $1 billion), making what the company claims will be the largest marine insurer in the world with a share of the worldwide equivalent market of around $16.5 billion.
“(This) will enable us to further optimize our marine portfolio and expand our customer focused approach by being able to offer clients and brokers a wide range of products and services. It also allows us to focus on developing our U.S. property and casualty business with Fireman’s Fund,” said Clement Booth, the Allianz SE board of management member responsible for both AGCS and FFIC.
Mike LaRocco, Fireman’s Fund president and CEO, said, “This move lets us concentrate on the domestic personal and commercial markets, where we see the most potential for profitable growth. In addition, this is a logical response to the needs of global marine clients and demonstrates our commitment within the Allianz Group to speak to customers with a single voice.”
The AGCS marine operation covers the spectrum of marine business — from ocean-going “blue-water” vessels and international cargo shipments to private yachts, coastal and river craft as well as related services such as freight forwarders and logistics specialists. In addition, ACGS offers specialist marine risk consultancy services, offering clients technical support for risk reduction ‘in the field.’ AGCS’ global team includes Master Mariners and logistics specialists who advise on cases such as unusual as tracking down cargo lost overboard on the high seas or to pirates.
The proposed merger of the portfolios is subject to regulatory approval.
Tower Group, CastlePoint
New York-based insurer Tower Group, Inc. has agreed to acquire the rest of Bermuda reinsurer CastlePoint in a transaction valued at approximately $490 million. Tower already owns 6.7 percent of CastlePoint.
The deal will allow Tower to shift some of its reinsurance to other carriers at more favorable terms and to offer CastlePoint’s programs and reinsurance services.
Under the terms of the agreement, CastlePoint shareholders would receive a combination of Tower common stock and cash equal to $12.68 per CastlePoint share.
Following the acquisition, Tower will continue to trade on NASDAQ under Tower’s existing ticker symbol TWGP and CastlePoint will be delisted.
CastlePoint is valued in the transaction at a 1.16 times CastlePoint’s book value at March 31, 2008, and a 42.8 percent premium to CastlePoint’s closing price yesterday.
Tower offers property and casualty insurance products and services through its operating subsidiaries. Tower’s insurance services subsidiaries provide underwriting, claims and reinsurance brokerage services to other insurance companies.
CastlePoint, a Bermuda-based holding company, through its subsidiaries, CastlePoint Reinsurance Co., CastlePoint Management Corp., and CastlePoint Insurance Co., provides property and casualty insurance and reinsurance business solutions, products and services to small insurance companies and program underwriting agents in the United States.
This transaction will result in CastlePoint being a controlled foreign corporation subject to U.S. taxation.
Tower said it will continue to focus on underwriting its brokerage business through retail and wholesale agents and CastlePoint will continue to provide its programs, risk sharing and reinsurance services to its program underwriting and insurance company clients.
New Jersey’s Palisades Safety and Insurance Association has taken a step to expand beyond auto insurance by acquiring the National Atlantic Holdings Corp., including its subsidiary, The Proformance Insurance Co.
Palisades is now the largest independent agency writer of automobile insurance in New Jersey.
Proformance and its agency force also sell personal umbrella coverage, a homeowner package, and a commercial auto product.
“The acquisition of Proformance provides Palisades and its independent agents with the opportunity to expand product offerings beyond private passenger auto. It also expands our network of agents and a pool of talented employees that will allow us to compete in a very competitive market for New Jersey customers,” said President and CEO Ed Fernandez.
Palisades will maintain a presence in Freehold, New Jersey as well as continue to operate from Berkeley Heights.
Palisades Safety is a Plymouth Rock managed company. The Plymouth Rock Companies write and more than $1 billion in personal and commercial auto and homeowner’s insurance across the Northeast.
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