White Mountains Insurance Group has agreed to buy the U.S. property casualty operations of British insurer CGNU Group for $2.1 billion. The Hanover, N.H-based insurer is also expected to pay $500 million in debt owed by the U.S. unit to its parent group. Warren Buffett, chief executive of insurance and investment group Berkshire Hathaway, is to invest up to $300 million in convertible shares of White Mountains as part of the deal’s financing.
In a letter to U.S. CGU agents, Robert Gowdy, president and CEO of the U.S. operation, said they expect the sale to be completed within 120 days. “I am particularly excited about [the acquisition] because our new shareholders strongly support our exclusive commitment to the independent agency system and to the U.S. property/casualty marketplace,” Gowdy said.
CGU’s home office will remain in Boston and there are currently no plans for organizational changes to the company. It is expected that White Mountains’ Chairman and CEO Jack Byrne will join the CGU holding company’s board as its chairman. The unit will also be adopting a new company name as the U.K. parent company retains the CGU moniker.
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