Following recently-announced plans to exit its specialty insurance underwriting operations, Aon Corporation of Chicago entered an agreement in principle to sell its specialty property and casualty insurance subsidiary, Sheffield Insurance Corporation, to Bermuda reinsurer AXIS Specialty Limited.
Subject to regulatory approval, the pending transaction follows Aon’s October announcement that it planned to sell off its specialty lines after deciding not to spin off its major underwriting business, Combined Specialty Group.
Dennis Reding, former chairman and CEO of Combined Specialty Group, will become president and CEO of the new unit, to be named AXIS Specialty Insurance Company. Marshall Turner and other members of Combined Specialty also plan to join the new unit. In addition, William Boornazian of AXIS Specialty’s Glastonbury, Conn. operation will join the new division. AXIS Specialty Insurance will remain headquartered in Atlanta, with offices in New York, Chicago, Los Angeles and Glastonbury.
David Cole will replace Reding as chairman and CEO of Combined Specialty, and will continue overseeing Aon’s extended warranty business. According to Aon director of public relations Al Orendorff, Sheffield wrote $22 million in premiums for the year ending Sept. 30, 2002.
Combined Specialty had acquired Sheffield from Vesta Insurance Group earlier this year as part of a strategy to expand into profitable specialty property/casualty markets. In the months following the acquisition, however, Aon’s intention to divest its underwriting operations was abandoned after offers made by potential buyers were deemed unacceptably low by the company. According to Aon’s third quarter 2002 earnings statement, capital requirements caused the company to nix plans to spin off Combined Specialty. Instead, Aon announced intentions to retain its major underwriting operations and exit specialty insurance markets, which led to the sale of Sheffield to AXIS. “Other than that we’re retaining (Combined Specialty), there’s not much more that we can say about it,” Orendorff explained. “We don’t want to speculate on what may happen in the future.”