Travelers Property Casualty Corp. announced that it has purchased the renewal rights to Royal & SunAlliance USA’s commercial lines national accounts, middle market and marine businesses, and standard and preferred personal lines businesses.
Effective immediately, Travelers will begin the preparation for offering renewal policies to Royal & SunAlliance’s customers, agents and brokers for these targeted lines of business, subject to Travelers underwriting guidelines. The benefits of this transaction include:
*An attractive purchase price.
*An ability to acquire up to approximately $1.5 billion in new net written premiums.
*Accretive to earnings in 2004 and provides incremental net income of approximately $50 to $60 million in 2005.
*Expanded distribution network in Personal Lines of a potential 500 new agents, to complement our 6,500 personal lines agents offering standard and preferred products.
*Expanded presence in Commercial Lines.
The purchase price will consist of a minimum payment of $25 million, with a potential additional payment contingent on the volume of business actually written. The additional payment is currently estimated to be in the range of $35 million to $40 million.
Royal & Sun Alliance said the sale is part of a strategic shift by R&SA worldwide to refocus operations on those markets and businesses where it has a leading position, primarily the United Kingdom, Scandinavia and Canada.
Royal & SunAlliance USA business lines not included in the sale are Non Standard Auto Personal Lines, DPIC, Grocers Insurance, Risk Management global property, Asia Branch and SJA Agency. The company is considering a range of options with respect to these businesses, including further renewal rights transactions and disposals.
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