Business Moves

November 2, 2008

Arthur J. Gallagher, Fuller & O’Brien

Insurance brokerage firm Arthur J. Gallagher & Co. has acquired Albany, New York-based insurance broker Fuller & O’Brien Inc. for an undisclosed sum. Fuller & O’Brien is a retail broker that specializes in construction and related industries such as architectural, engineering and legal and accounting firms as well as construction equipment dealers and materials suppliers. Fuller & O’Brien will continue to operate at its current location under the direction of Douglas Brown, Northeastern regional manager of Gallagher’s retail property/casualty brokerage operation.

PURE, New York

White Plains, N.Y.-based Privilege Underwriters Reciprocal Exchange (PURE) has received approval to begin offering homeowners and other personal lines insurance in New York state, and has plans to begin covering high-value homes in downstate New York, including Long Island. PURE is a specialty insurer offering homeowners, automobile, jewelry, art, personal liability and watercraft insurance coverage. PURE filed for approval of its rates and policy forms in September; it’s awaiting approval prior to launch.

Glens Falls Bank, Upstate Agency

Arrow Financial Corp.’s lead subsidiary, Glens Falls National Bank and Trust Co., agreed to acquire Upstate Agency, Inc., an independent insurance agency headquartered in Chestertown, New York with five offices located in northern New York.

Mark Carpenter, president of Upstate Agency, will continue managing the agency. Arrow anticipates that it will complete the transaction in the fourth quarter of 2008.

Glens Falls National currently owns another insurance agency, Capital Financial Group, Inc., which sells group health and life insurance.

Safety, New Hampshire

Safety Insurance Group, Inc., a provider of auto, home and business insurance in Massachusetts, will begin offering personal auto and homeowners insurance to New Hampshire residents. According to industry data, the New Hampshire personal lines insurance market has over $2 billion in property and casualty premium. George Murphy, vice president of marketing for the company, said Safety intends to build on its existing presence in Massachusetts along the New Hampshire border, as many of its current agents have physical locations in New Hampshire.

Aon, Mercury General

Mercury Casualty Co., the largest insurance subsidiary of Los Angeles-based Mercury General Corp., has agreed to buy Auto Insurance Specialists Inc. from Aon Corp.

AIS is an independent broker and major producer of automobile insurance in California. It reported $400 million of direct premiums written during 2007. The transaction is expected to close in the first quarter of 2009.

The purchase price is $120 million plus a potential earn out of up to $34.7 million. The sale includes business transacted under the Auto Insurance Specialists Inc., PoliSeek and Aon Recreation Insurance brands.

Aon said the sale is consistent with its plan to shape the firm around risk management and commercial lines insurance brokerage, reinsurance brokerage, and human capital consulting.

Mercury General Corp. sells personal automobile and homeowners insurance through independent producers in several states.

DarwinPro, Allied World

Alleghany Corp. reported that the previously announced merger of its subsidiary Darwin Professional Underwriters, Inc. with Allied World Assurance Co. Holdings, Ltd. has been completed. Alleghany, through its subsidiary Alleghany Insurance Holdings LLC (consisting of its insurance operating units RSUI Group, Inc., Capitol Transamerica Corp., and Employers Direct Corp.) writes property and casualty insurance.

AIG, Hartford Steam

American International Group , which is in the process of selling assets to repay a massive U.S. government loan, has hired Bank of America to advise it on the sale of its U.S. personal lines business, sources told Reuters.

The insurer also has hired investment bank Keefe, Bruyette & Woods to sell its Hartford Steam Boiler Inspection and Insurance Co. unit, Reuters reported.

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