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 the 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 ensue 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.
Insurance Specialty Group, E.L.M.
Insurance Specialty Group LLC has completed its acquisition and merger with E.L.M. Insurance Brokers Inc. of El Segundo, Calif. The company said the combined company will have $150 million in sales with 10 offices throughout the United States.
This acquisition and the recent five-year strategic alliance agreement with Home Buyers Warranty Corp. for the marketing, underwriting and servicing of the Asset Protection Program (APP) expand ISG’s offerings in the specialty lines insurance market.
ISG is a national insurance brokerage and underwriting firm with offices in New York; Atlanta; Chicago; Dallas; Boca Raton, Fla.; Hartford, Conn.; and Burbank and Los Angeles, Calif.
Hanover, AIX Holdings
The Hanover Insurance Group will acquire Windsor, Connecticut-based specialty insurer AIX Holdings Inc.
AIX Holdings focuses on underwriting and managing program business and alternative risk transfer techniques. It has developed general liability, workers’ compensation, property and auto liability programs for markets with 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 of this year.
Brown & Brown, Reed Brothers
A subsidiary of Florida-based Brown & Brown Inc. acquired the assets of Reed Brothers Insurance Group Inc., of Columbia, Kentucky and Tampa, Florida, according to officers of the companies.
Reed Brothers Insurance Group, with annual revenues of approximately $2.1 million, specializes in property and casualty and group employee benefits insurance products. Reed Brothers services clients in the recreational vehicle and power sport dealership industries and the manufactured housing industry throughout the U.S.
Mike Neal and his staff will operate as a free-standing profit center under the Reed Brothers name from their current locations in Columbia, Ky. and Tampa, Fla.
Brown & Brown, Advanced Insurance Concepts
The assets of Advanced Insurance Concepts, Inc., of Bensalem, Pennsylvania, have 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 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 U.S. are combining their marine insurance businesses.
The two Allianz subsidiaries will merge 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, Paris, Hamburg, London and Singapore. The global Allianz marine gross premiums total $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.”
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.
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.