Wellington to Acquire AXA’s U.S. Specialty Lines

June 9, 2004

London-based Wellington Underwriting plc, a major Lloyd’s underwriter, has announced plans for expansion into U.S. Specialty business through the proposed acquisition of AXA Corporate Solutions Excess and Surplus Lines Insurance Company.

The announcement indicated that “substantial agreement has been reached between the parties on the terms of the acquisition and it is expected that a conditional purchase agreement will be signed very shortly,” enabling Wellington to acquire the Delaware-based excess and surplus lines insurance company from AXA. It will rename the company Wellington Specialty Insurance Company.

“Wellington Specialty will have its main office in Phoenix, Arizona, and will write a book of business which focuses on small direct, general agency produced, commercial casualty and property business throughout the United States,” said the announcement. “Dick Nenaber will join Wellington to lead Wellington Specialty, bringing to the Group over 25 years of experience in this market and will report to Stan Kott, who heads up Wellington’s business operations in the US.”

Wellington said that with controlled growth plans, it expects premium volume to reach $40 million by the end of 2005. It also noted that funding of the purchase and initial capital provision, are expected to be approximately $40 million, and “will come from Wellington’s own resources.” Subject to U.S. regulatory approvals, Wellington hopes to commence underwriting in the last quarter of this year.

“Wellington’s existing US based operation, Wellington Underwriting Inc., will operate alongside Wellington Specialty, sourcing facultative and treaty reinsurance business to Wellington’s syndicate 2020. It is not anticipated that the two companies will have any formal trading relationships with one another,” said the announcement. The U.S. company currently has offices in Hartford, Atlanta, Chicago, Columbus (Ohio), Kansas City, San Francisco and Summit (New Jersey) and satellite offices in New York and Sonoma (Calif.). It employs 75 people and underwrites principally U.S. property facultative reinsurance and auto liability reinsurance.

“I am truly excited about the opportunities that this move will bring to Wellington and our U.S. presence,” Kott commented. “Dick’s experience and track record in this niche market is unparalleled and I am pleased that he is going to be part of the team in the United States. Nenaber was a co-founder and Senior VP of Western Heritage Insurance Company. He subsequently served as President of Fulcrum Insurance Company, the E&S subsidiary of Sorema/SCOR prior to its sale to the Argonaut Group. He is a graduate of Arizona State University and began his E&S career in 1977 with Great Southwest Fire Insurance Company.

Julian Avery, CEO of Wellington Underwriting plc stated: “Wellington Specialty is demonstration of another step forward in our strategy to develop Wellington into a sustainable, independent, specialist insurance organisation. Wellington Specialty will complement the business currently written by the Group and will provide business opportunities not available to Wellington’s operations at Lloyd’s.”

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