View this article online: https://www.insurancejournal.com/news/midwest/2006/01/16/64244.htm
The Kansas City Star reported today that the proposed $1.1 billion sale of Universal Underwriters Insurance Co. has fallen through following a regulatory examination that may mandate refunds to customers in the amount of tens of millions of dollars.
Zurich Financial Services Group, based in Overland Park, posted a statement on its website that said that it and affiliates of Hellman & Friedman LLC, the would-be buyers, had agreed not to proceed with the transaction.
The statement said that the decision followed “the identification of regulatory matters specific to Universal Underwriters, which surfaced during a routine market conduct examination performed by the Kansas Department of Insurance.”
The Kansas Insurance Department ordered Universal Underwriters to refund to customers overcharges discovered during the examination, saying that the department had found a “large number of rating errors” in the company’s commercial package policies.
Insurance department officials said the precise amount of the overcharges wouldn’t be known until Universal Underwriters completes an internal review. However, a spokeswoman for the department estimated the refunds would range from $1,000 to $10,000 per commercial account and cover Kansas policies issued since Jan. 1, 2002.
Zurich Financial, in the third quarter of last year, took a $100 million charge to cover the estimated cost of the refunds and the cost of administering them. A spokesman for the company said that the total refund amount won’t be known until a third-party audit is completed.
Hellman & Friedman had sought to revise the terms of its purchase offer as a result of the Kansas insurance department’s directive, “and the two parties couldn’t come to mutually agreeable terms,” according to the Kansas City Star’s story.
Universal Underwriters employs approximately 900 people in the area and another 900 in 28 regional offices across the United States. The 83-year-old company is the nation’s largest provider of property and casualty insurance to automobile, truck and motorcycle dealers, as well as the automotive aftermarket industry.