London-based insurer and reinsurer Beazley Group is acquiring Boston-based First State Management Group, an underwriting manager specializing in excess and surplus lines commercial property insurance for $35.4 million in cash.
First State is a subsidiary of The Hartford Financial Service Group and is led by president and chief operating officer Judy Patterson.
The acquisition will significantly increase Beazley’s presence as an insurer of mid-sized U.S. commercial property business that does not normally come to Lloyd’s. Officials said that First State plans to underwrite around $150 million of gross premium for 2009, balancing the specialty lines business — professional and management liability business– that Beazley has been writing locally in the U.S. since 2005.
The Hartford said the move is part of its strategy of moving away from excess and surplus lines business and was not triggered by recent troubles with its life insurance operations.
“This is an agreement we have been working on for many months. We are entering into this transaction to reduce our exposure to excess and surplus lines property insurance, which is not core to our business,” said Gary Thompson, executive vice president of The Hartford’s property and casualty middle market and specialty lines insurance.
Thompson said First State’s livestock and nursing home programs will transition directly to The Hartford.
As of Nov. 30, 2008, First State had gross assets of $10.6 million. First State does not report on its own profit as a standalone entity but instead reports as part of a division of the Hartford Group.
Beazley said it plans to raise additional equity capital through a proposed rights issue and placing, supporting the acquisition of First State and growth at Lloyd’s.
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