The U.K.’s Wellington Underwriting plc. announced that it has completed the purchase of AXA Corporate Solutions Excess and Surplus Lines Insurance Company, first announced on June 25, 2004.
The bulletin noted that final regulatory approvals have been received and that it has renamed the acquired units Wellington Specialty Insurance Company (Wellington Specialty). The new division’s capital and surplus has also been increased to $30 million through a capital contribution by Wellington.
In a separate bulletin, A.M. Best Co. announced that it has assigned Wellington Specialty an initial financial strength rating of “A-” (Excellent) and an issuer credit rating (ICR) of “a-.” It also assigned an “a-” ICR to the U.K.’s Wellington Underwriting plc. and an initial financial strength rating of “A-” (Excellent). All of the outlooks on the ratings are stable (See also IJ Website Nov. 24).
“Based in Scottsdale, Arizona, Wellington Specialty is authorized to underwrite excess and surplus lines business in 33 states and will focus on small direct, general agency produced, commercial casualty and property business,” said the bulletin. “It is anticipated that underwriting will commence in December 2004.”
Management of the company will be conducted by an experienced team headed by President, Dick Nenaber, CFO Scott Wilson, Sr. VP-Claims William Kiesler and Sr. VP-Underwriting Robert Karr; all of whom have more than 25 years of surplus lines experience. Wellington Specialty’s premium volume is expected to reach $40 million by the end of 2005 through a strategy of carefully controlled growth.
Nenaber commented: “I am very excited about this opportunity to utilize long-standing relationships in this market. We have been preparing for this with careful hiring of experienced individuals and construction of a well controlled infrastructure to write this niche business.”
Stan Kott, CEO of the Group’s U.S. operations, stated: “We are happy to have obtained the regulatory approvals which have been the final step to enable Dick and his team to become fully operational. Market conditions continue to be strong and Dick’s contacts and experience will give us an advantage in writing profitable business.”
Best indicated that its initial ratings “stem from Wellington Underwriting plc’s completed purchase of AXA Corporate Solutions’ Excess and Surplus Lines Insurance Company, a Delaware domiciled excess and surplus lines insurer and subsidiary of its ultimate parent company AXA Corporate Solutions, on November 23, 2004.
“The company was acquired from AXA Corporate Solutions as essentially a clean shell and was subsequently re-named Wellington Specialty Insurance Company. The purchase price for the acquisition is approximately $1.8 million for the cost of the shell’s licenses plus the capital and surplus of the company. Accordingly, the rating of the former AXA Corporate Solutions Excess & Surplus Insurance Company has been removed from under review and assigned a rating of NR-5 (Not Formerly Followed).”
Best added that the initial ratings “take into consideration the initial capitalization and business plans of Wellington Specialty, its experienced management team as well as the near-term earnings prospects to be derived from the recent price firming that has occurred within the surplus lines market.”
They also take into account “management’s intention to prudently manage its capital in accordance with levels previously discussed with A.M. Best. The ratings also acknowledge Wellington Specialty’s quality balance sheet, which is unencumbered by debt and prior year reserve liabilities.”
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