First Mercury, Valiant
First Mercury Financial Corp., based in Southfield, Mich., reported that its principal insurance subsidiary, First Mercury Insurance Co., is acquiring Valiant Insurance Group Inc., a subsidiary of Ariel Holdings Ltd.
The purchase price for Valiant, an amount equal to Valiant’s tangible book value, is anticipated to be approximately $55 million at closing. First Mercury will use cash from its insurance subsidiaries to complete the transaction.
Ariel has agreed to provide First Mercury with full protection related to the runoff of Valiant’s net loss and loss adjustment expense reserves and unearned premium reserves reflected on the closing date balance sheet.
The transaction is subject to customary closing conditions and regulatory approvals and is anticipated to close in the fourth quarter of 2010.
Valiant’s existing classes of business to be retained by First Mercury include primary and excess casualty, professional and management liability, and marine.
First Mercury intends to retain Valiant’s experienced underwriting teams that produce these classes of business. Valiant President and CEO Gary Dubois, and Scott Bayer, senior vice president of Valiant, also are joining First Mercury.
Classes of Valiant business that are not consistent with First Mercury’s specialty niche underwriting focus will be discontinued.
Through May 31, 2010, gross written premiums for Valiant were approximately $34 million. In the 12 months following the closing of the transaction, First Mercury anticipates that Valiant will write approximately $50 to $60 million of gross written premiums.
First Mercury intends to retain approximately 33 percent of Valiant’s anticipated gross written premiums.
National Interstate, Vanliner
National Interstate Corp., based in Richfield, Ohio, announced that its principal insurance subsidiary, National Interstate Insurance Co., completed its previously announced acquisition of Vanliner Insurance Co. from UniGroup Inc. Vanliner provides insurance for the moving and storage industry.
The purchase price of $128 million, paid in cash from available funds, represents Vanliner’s estimated tangible book value at closing, as well as the value of certain named information technology assets. As previously discussed, the purchase price may be adjusted after closing based on Vanliner’s final closing date balance sheet and certain financial guarantees.
UniGroup has agreed to provide National Interstate with comprehensive financial guarantees related to the runoff of Vanliner’s balance sheet following the close whereby both favorable and unfavorable balance sheet development inures to UniGroup.
National Interstate does not expect the transaction to have a material effect on 2010 earnings. Beginning in 2011, the acquisition is expected to be accretive to earnings and return on shareholders’ equity.
Vanliner wrote approximately $104 million of gross moving and storage premiums in 2009, representing approximately 58 percent of its total business.
In conjunction with the acquisition, National Interstate and UniGroup entered into a five-year agreement under which Vanliner remains the exclusively endorsed insurance provider for UniGroup’s affiliated Mayflower Transit and United Van Lines moving and storage agents.
Vanliner will continue to operate from its current offices in Fenton, Mo., offering insurance solutions to the entire moving and storage industry.
NAU Group, QBE
Lightyear Capital LLC, a New York-based private equity firm, has completed the sale of crop insurer The NAU Group to QBE Holdings Inc. NAU, which is headquartered in Ramsey, Minn. is now a wholly-owned subsidiary of QBE.
As consideration for the merger, QBE made a cash payment of $565 million and in addition, the stockholders of NAU received a cash dividend of $30 million immediately prior to closing.
Lightyear originally invested in NAU in May 2005. Since then, NAU has risen from the seventh to third largest writer of multi-peril crop insurance in the United States, with a current market share position of 11 percent.
NAU operates 10 offices across the U.S. and is represented by1,600 independent agents. The company also maintains an A- rating from A.M. Best.
Praxis Consulting, Aon Recovery
Muncie, Ind.-based Praxis Consulting Inc., a specialty provider of recovery and consultative services, has completed its acquisition of Aon Recovery Inc., the subrogation specialty business unit of Aon Global Risk Consulting.
Praxis’ business model, approach and technology remain intact. The increased capacity and expertise will result in added depth to the company’s repository of knowledge and recovery services available to clients.
Praxis will maintain an office in Long Island, N.Y.
Praxis Consulting specializes in subrogation benchmarking, outsourcing and closed-file reviews, and enhancing the recognition and recovery results of U.S. auto insurers, self-insureds and municipalities in all 50 states. Praxis was founded in 1997.
Western National Insurance Group, headquartered in Edina, Minn., announced that it has expanded its personal lines program to begin serving customers in the Iowa.
Effective immediately, the carrier’s personal insurance products – personal auto, homeowners, dwelling property and personal umbrella – are available through select Iowa-based independent agency partners throughout the state.
Western National’s personal auto program is known for its “No-Surcharge Promise,” which guarantees the carrier will never raise a policyholder’s rates as the result of accidents or moving violations. Various discounts, credits and endorsements are also available.
Western National Insurance Group is a super-regional property/casualty insurance group writing more than $240 million in direct premium in 10 states. The group consists of four active companies – Western National Mutual Insurance Co., Western National Assurance Co., Pioneer Specialty Insurance Co. and Titan Property & Casualty Insurance Co. – serving personal and commercial customers in the Midwestern and Western United States.
An affiliation with Fond du Lac, Wis.-based Wisconsin American Mutual Insurance Co. is currently pending board and regulatory approval.
ISU Network, Burns & Wilcox
The ISU Network and Burns & Wilcox Ltd. have entered into a service agreement for ISU’s agency members in the Midwest. This agreement partners the expertise and market access of Burns & Wilcox with the retail distribution capabilities of ISU member agencies in the Midwest. The agreement is a comprehensive service and compensation program for ISU members.
A national agreement is contemplated for the near future.
ISU International is a countrywide independent agency network based in San Francisco with members in 17 states. Based in Farmington Hills, Mich., Burns & Wilcox Ltd. is a specialty insurance wholesaler.
Keystone, Hummel, Associated, Rosemeyer
Keystone Insurers Group (KIG), headquartered in Northumberland, Penn., has added three Indiana franchisees to its growing list of partner agencies. Hummel Insurance Group, Associated Agencies and Rosemeyer Agency bring the Indiana franchise total to 25 and join KIG’s network of more than 200 independent agencies in six states.
Neal Williams, KIG’s vice president for Indiana, noted that referrals to KIG come from agencies already in the group. “Keystone partners recommend their peers – those of high integrity, those involved in their associations and communities, and those with quality results.”
Hummel Insurance Agency, in Lawrenceburg, was established in 1957 and has grown steadily over the years through acquisitions. The managing owners are Randy Roberts, Andy Hummel, Dan Hummel and Mac McLaughlin. Hummel Insurance employs more than 40 people at offices in Lawrenceburg, Vevay, Rising Sun, Milan and Versailles.
Associated Agencies, based in New Castle, Ind., was founded in 1930. It is currently owned by Gary Thornhill and offers all lines of coverage.
Rosemeyer Agency, founded in Ft. Branch in 1945, is owned by Larry and Carolyn Johnson. Larry Johnston is highly involved in the Ft. Branch community.
Founded in 1983, KIG is owned by its employees and franchise partners in Pennsylvania, North Carolina, Virginia, Indiana, Ohio and Kentucky. Each partner is an independent agency. With property/casualty premiums exceeding $1 billion, KIG is ranked sixth on Insurance Journal’s 2009 list of Top 100 Privately-Held Property/Casualty Agencies.
The Doctors Company, American Physicians Capital
The Doctors Co., a national insurer of physician and surgeon medical liability, will acquire American Physicians Capital Inc. (APCapital), an East Lansing, Mich.-based provider of healthcare liability insurance, in a transaction that is expected to close in the fourth quarter of 2010. The aggregate purchase price is approximately $386 million.
The Doctors Co. said the merger expands its position as the largest national insurer of physician and surgeon medical liability, bringing the number of member insureds to nearly 55,000.
APCapital’s board of directors has approved the proposed transaction and will recommend that its shareholders approve the merger. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals and approval by a majority of APCapital’s shareholders.
APCapital operates in the Midwest and New Mexico markets through American Physicians Assurance Corp. and other subsidiaries.
The Doctors Co. has $3 billion in assets and an A rating by Fitch Ratings.
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