Tower Group to Acquire Specialty Underwriters’ Alliance of Illinois

June 22, 2009

New York-based Tower Group, Inc. has agreed to purchase Illinois-based specialty insurer Specialty Underwriters’ Alliance, Inc. in a transaction valued at approximately $107 million.

Under the terms of that agreement, SUA shareholders would receive Tower common stock equal to $6.72 per SUA share based on last Friday’s closing stock price for Tower of $24.00. SUA is valued in the transaction at an 87 percent premium to SUA’s average closing price over the past 30 trading days.

SUA said the deal will enable it to better leverage its independent general agent distribution network and expand.

Tower said the deal will allow it to create a separate underwriting and operational infrastructure dedicated to specialty business to take advantage of the growth opportunities in this area.

The deal also gives Tower a Midwest regional office to support continued geographical expansion. SUA is headquarted in Chicago. Tower said its own brokerage insurance business will be expanded by utilizing SUA’s underwriting staff to offer products to wholesale and retail agents in the Midwest where Tower does not have an operating presence.

The boards of directors of Tower and SUA have approved the transaction, and the board of directors of SUA has recommended the transaction to its shareholders. The transaction is expected to close approximately at year-end 2009, subject to customary closing conditions, including regulatory approvals.

The deal would appear to put an end to takeover attempts by Texas-based Hallmark Financial Services that SUA been fighting.

Tower Group, Inc. offers property and casualty insurance products to individuals and small to medium-sized businesses through retail and wholesale agents and specialty business through program underwriting agents. Tower also offers reinsurance solutions to small insurance companies through its Bermuda based reinsurer and U.S. insurance companies.

Specialty Underwriters’ Alliance, Inc., through its subsidiary SUA Insurance Co., provides commercial insurance products through exclusive wholesale Partner Agents that serve niche groups of insureds including tow trucks, professional employer organizations, public entities, and contractors.

Topics Mergers Agencies Excess Surplus Underwriting Illinois

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