Markel to Acquire Workers’ Compensation Insurer FirstComp

July 15, 2010

Specialty insurer Markel Corp., has struck a deal worth at least $135 million to acquire Aspen Holdings, which sells workers’ compensation under the name FirstComp to small businesses in 31 states.

Aspen, which is headquartered in Omaha, Nebraska, operates primarily through FirstComp Insurance Co., a Nebraska-domiciled insurance company; FirstComp Underwriters Group, Inc. and FirstComp Insurance Agency, Inc., which act as managing general agents; and REX, Inc., which operates as a wholesale intermediary.

Aspen’s subsidiaries underwrite more than $300 million of gross written premium annually. They operate through a network of 9,000 retail agents and employ 500 people in Nebraska, Rhode Island, Nevada, California and Florida.

Following the acquisition, Aspen will continue to operate as a separate business unit, with Luke Yeransian, Aspen’s current CEO, as president. The operating unit will be part of Markel’s specialty admitted segment, headed by Mike Crowley, Markel’s president and co-chief operating officer.

Aspen’s shareholders will receive up-front consideration of approximately $135 million in cash plus certain stock option value, according to Markel.

The transaction is subject to customary closing conditions, including regulatory approvals and approval of Aspen’s shareholders, and is expected to close before year-end.

“This transaction presents an excellent opportunity for Markel to use its financial strength to allow Aspen to increase its penetration in the states where it currently operates, expand geographically and retain a greater share of the business it generates over time,” said Crowley.

Crowley also said that “Aspen’s workers’ compensation expertise can be brought to bear to service current Markel customers.”

The acquisition comes at a time of declining premiums and rising combined ratios for workers’ compensation carriers across the country.

Markel, based in Richmond, Va., plans on using Aspen’s technology platform to offer additional Markel Specialty product lines.

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