Starr Companies has acquired Wright USA from Ironshore Insurance Services, a subsidiary of China’s Fosun Group.
Wright USA is an insurance agency and third-party administrator principally providing Federal Employee Professional Liability (FEPLI) as well as disability, life, dental and other coverages to federal employees.
The organization will use the marketing name Starr-Wright USA. The organization is located in Wilmington, Delaware, and is licensed to operate in all 50 states and the District of Columbia.
Terms were not disclosed.
Ironshore’s ownership of Wright USA had become an issue following China’s Fosun Group’s acquisition last November of the remaining 80 percent of the Bermuda-based specialty insurer Ironshore that it did not already own. As reported by Insurance Journal, U.S. authorities have been reviewing that deal.
The Committee on Foreign Investment in the United States (CFIUS), part of the U.S. Department of the Treasury, was reportedly concerned about a professional liability product designed for federal employees, which Ironshore sold through its Wright subsidiary. CFIUS was reportedly concerned about who has access to this list of federal employees, following the hack last year of employee records held at the Office of Personnel Management.
The government regularly conducts company reviews after a sale to a foreign investor, Kevin H. Kelley, CEO of Ironshore, told employees in a June 6 letter to employees.
“CFIUS evaluates national security issues in connection with foreign investments and acquisitions in the U.S.,” said Kelley.
In his letter, Kelley explained that the process is a civil regulatory one which does not involve any allegations of wrongdoing. “Fosun and Ironshore voluntarily filed with CFIUS and have been cooperating fully…,” he said.
As the Wright business accounts for less than 0.5 percent of Ironshore’s total annual premium, Fosun was willing to sell the subsidiary to alleviate any CFIUS concerns.
In July 2015, A.M. Best placed Ironshore under review with negative implications due to the then-planned $1.84 billion acquisition of Ironshore by Fosun. A.M. Best said it was worried about Fosun’s credit profile and financial leverage and how it would affect the insurer.
However this past June, A.M. Best changed its mind and restored the financial strength ratings of “A” (Excellent) and issuer credited ratings of “a” for Ironshore. A.M. Best said the affirmation of its ratings nearly a year later reflected its view “that Ironshore has strong standalone attributes as a specialty insurer, will continue to build a relevant franchise in the specialty sector and is capable of delivering strong operating results.”
In July, Ironshore filed for an initial public offering (IPO).
Starr Companies, which is headed by CEO is Maurice Greenberg, former CEO of American International Group, is the marketing name for the insurance and travel assistance companies and subsidiaries of Starr International Co. Inc. and for the investment business of C.V. Starr & Co. Inc. and its subsidiaries.
Starr provides property, casualty, and accident & health insurance products as well as a range of specialty coverages including aviation, marine, energy and excess casualty insurance. Starr has insurance company subsidiaries domiciled in the U.S., Bermuda, Hong Kong and Singapore.
In 2014, Starr Companies acquired a majority ownership of Shanghai-based Dazhong Insurance Co. Ltd. of China, which had been state-owned.
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