The top M&A story of 2020 was more a global than national story but it captured more readers in every geographic location than any other. Since it was first announced in March, the proposed Aon-Willis merger remained the leading merger and non-merger insurance story for the entire year. But there were also other proposed and completed transactions that caught the eyes of Insurance Journal’s South Central audience. Here are the M&A reports of most interest to South Central region readers in 2020:
Global insurance brokers Aon and Willis Towers Watson in March announced they had agreed to merge in an all-stock transaction with an implied combined equity value of approximately $80 billion. Upon completion of the combination, existing Aon shareholders will own approximately 63% and existing Willis Towers Watson shareholders will own approximately 37% of the combined company on a fully diluted basis. According to S&P, Aon intends to combine with Willis in an all-stock transaction valued at about $30 billion, with Willis shares being exchanged to Aon shares. The combined company will be named Aon. Combined the companies have more than $20 billion in revenue. Aon reported $11 billion in revenue with $2.2 billion net income for 2019 compared to $9 billion revenue and $1.4 billion net income for Willis Towers Watson. Aon will maintain operating headquarters in London, United Kingdom. The parent company will be incorporated in Ireland. The combined firm will have 95,000 employees globally, with what the announcement said will be a “significant presence” in Chicago, New York and Singapore. John Haley will take on the role of executive chairman with a focus on growth and innovation strategy. The combined firm will be led by Greg Case and Aon Chief Financial Officer Christa Davies. The board of directors will comprise proportional members from Aon and Willis Towers Watson’s current directors. In December Aon confirmed that the European Commission has initiated a review of the proposed merger. Aon said the review is a common next step “for a transaction of this size and complexity” and said it remains on track to close the deal in the first half of 2021.
State Farm Mutual Automobile Insurance Co. is acquiring Dallas-based nonstandard auto insurer, GAINSCO, in a $400 million cash transaction reported in September. It will be the first time in State Farm’s 98-year history that it has acquired an insurance company. GAINSCO specializes in minimum-limits personal auto coverage and actively distributes its nonstandard personal auto products through independent retail agents in Arizona, Florida, Georgia, New Mexico, Oklahoma, South Carolina, Tennessee, Texas, Utah, Virginia, Ohio and Alabama. Its insurance operations are conducted through its subsidiary, MGA Insurance Company Inc., a Texas corporation.
In December, Charlotte, N.C.-based Truist Insurance Holdings reported that it will complete five insurance acquisitions the fourth quarter, adding more than $100 million of combined annual revenue to its wholesale division. The most recent of these transactions was the acquisition of Wellington Risk Holdings Inc., an insurtech that operates as a managing general agent in the admitted residential property markets, with a strong presence in Texas. Wellington has developed a virtual marketplace offering that includes an easy-to-use agent portal for placing residential property insurance business. The insurance firm, a subsidiary of Truist Financial Corp., has already closed on three transactions: W. Brown & Associates Property & Casualty, an Irvine, California-based surplus lines broker and MGA; Specialty Risk Associates, a Shreveport, Louisiana-based surplus lines broker and MGA; and Program Insurance Management of Sarasota, a Sarasota, Florida-based managing general underwriter with specialized programs for industrial chemical manufacturers and distributors. In addition to Wellington, Truist was expected to close a transaction with Fidelis Group Holdings, a Covington, Louisiana-based provider of specialty insurance products for the marine and cargo industries, by year end 2020. Truist Insurance Holdings, formerly BB&T Insurance Holdings, operates more than 250 offices through its subsidiaries: McGriff (comprising McGriff Insurance Services and McGriff, Seibels & Williams); CRC Insurance Services; Crump Life Insurance Services; AmRisc; and its Premium Finance companies (AFCO Credit Corp., Prime Rate Premium Finance Corp., and CAFO).
Lighthouse Property Insurance Corp. said in March it would acquire its sister carrier, Prepared Insurance Co., from Prepared Holdings Group. Lighthouse is a Louisiana-domiciled property/casualty insurance carrier writing in Louisiana, Texas, North Carolina and South Carolina. Prepared is a Florida-domiciled carrier authorized to write in Florida and Louisiana. Lighthouse will assume the Prepared portfolio and write directly in Florida through Prepared Managers, a licensed Florida managing general agent. Lighthouse will also assume all assets and liabilities of Prepared. The resultant carrier, including wholly owned subsidiary Lighthouse Excalibur Insurance Co. (Lighthouse Excalibur), which Lighthouse acquired in May of 2019, will have a statutory surplus in excess of $45 million and will cover approximately 175,000 homes across the Southeast. Lighthouse Excalibur has $11.5 million of statutory surplus as of 2019 year- end. Gross written premium for the combined enterprise will be in excess of $275 million. Lighthouse began writing homeowners policies in Louisiana in 2008. It has since expanded over the past 12 years. Prepared Insurance, based in Tampa, was licensed to write business in Florida in 2009 and offered homeowners insurance products including flood, condo, renters and dwelling fire policies. It had 32,018 policies in force and $63.5 million in total premium as of the third quarter 2019.
The Woodlands Insurance Co. (TWICO) in April completed a renewal rights agreement with Florida’s Gulfstream Property & Casualty Insurance Co. to acquire Gulfstream’s book of homeowner business in Texas. The transaction resulted in the transfer of approximately $4 million of in-force gross written premium to TWICO. TWICO began offering renewal terms for policies falling due for renewal on or after June 1, 2020. TWICO is a wholly owned subsidiary of TWFG Holding Co., which includes TWFG Insurance Services, TWFG General Agency and TWFG Premium Finance. Founded in 2004, Gulfstream, a Sarasota, Fla.-based insurance company, provides homeowners’ insurance and related services in Alabama, Florida, Louisiana, South Carolina and Texas.
Paragon Insurance Holdings, a national managing general agency, said in May that it had closed on its purchase of Trident Public Risk Solutions from Bermuda-based Argo Group. Trident provides insurance and risk management for public sector entities such as counties, municipalities, schools, special districts and governmental inter-local pools. It operates through a distribution network of national brokerages and local agencies. It has offices in San Antonio, Texas and Springfield, Mass. Paragon is headquartered in Avon, Conn., and writes more than 20 insurance programs including ones for arborists, ski facilities, pest control, timber, precision manufacturing and wineries. Paragon said the transaction positions it as one of the largest providers of commercial insurance coverage for public entities in the U.S.
Last January, Florida-headquartered Brown & Brown Inc. through its subsidiary Hull & Co. acquired substantially all of the assets of Dallas-based Texas All Risk, a managing general agent in Texas, Louisiana and Oklahoma. The transaction includes the asset acquisition of the All Risk companies: All Risk General Agency Inc.; Select General Agency; TARGA Investment Corporation; TARGA Premium Finance Company Inc.; and Texas All Risk General Agency Inc. (collectively, Texas All Risk). The Texas All Risk team continues to operate from its Dallas location as a new office within Brown & Brown’s Wholesale Brokerage Segment.
BRP Group Inc. subsidiary, Baldwin Krystyn Sherman Partners, in November agreed to acquire all of the outstanding equity interests of Insgroup Inc. a Houston, Texas-based provider of commercial property/casualty insurance, employee benefits, private risk services and surety to middle-market companies and individuals. With annual revenues of approximately $38.5 million, Insgroup represents the largest new partnership in BRP Group’s history. Insgroup President and Chief Executive Officer Brian Kapiloff will serve as a regional president within BRP Group’s middle market operating group. BRP Group has 160 colleagues in offices in Houston, Dallas, Addison and Austin.
A.M. Best said in March that the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of Southern Pioneer Property and Casualty Insurance Co., based in Jonesboro, Ark., remained unchanged following its acquisition by Biglari Holdings Inc. Biglari acquired Southern Pioneer, an insurer offering commercial property, homeowners, dwelling and other coverages throughout the southern states. Southern Pioneer will continue to operate under its existing structure as a subsidiary of Biglari. with the management team and all legal entities intact. Southern Pioneer was formed in 1981 in Trumann, Ark.; it moved to Jonesboro in 2007. The company originally focused on providing credit-related coverages for banks and furniture dealers. In 1992, it began writing license bonds and garage liability insurance for non-franchised automobile dealers in Arkansas. Its geographic territory for those products territory now includes Tennessee, Missouri, Alabama and Texas. In 2003, it began offering dwelling property and homeowners coverage in Tennessee and expanded this product to Arkansas in 2012.
Norman-Spencer Agency, a Dayton, Ohio-based program administrator and wholesale brokerage, in May acquired the business assets of Intercorp Inc. and BNK Insurance Services. Intercorp is based in Ephrata, Pennsylvania, and BNK Insurance Services is headquartered in Dallas, Texas. Intercorp manages national insurance programs and operates as a wholesale broker in the professional and environmental liability fields. Led by owner Elaine Matternas, the firm will continue to manage professional liability insurance programs for appraisal firms and appraisal management companies as a division of Norman-Spencer. BNK Insurance Services is a managing general agency that specializes in professional liability insurance for niche industries, including real estate agents, home inspectors, and mortgage brokers. Norman-Spencer said the deal is an effort to continue to grow and strengthen its real estate professional programs.
XPT Partners in April acquired Texas-based LP Risk Inc., a managing general agency and surplus lines broker. LP Risk has offices in Houston, San Antonio and Dallas. XPT said it will expand its transportation expertise by partnering with LP Risk and its in-house commercial auto programs and brokerage markets. The acquisition is XPT’s sixth investment and was preceded by Western Security Surplus, WE Love & Associates, SVA Underwriting, Klein & Costa and Sierra Specialty.
In May, Western Security Surplus, part of the XPT Group, acquired Texas-based Houston Surplus Lines, an excess and surplus lines general agency founded in 1994 and managed by Barbara Partlow and Carol Gardner. WSS is headquartered in Plano, Texas, with employees also located in California. Since 1981. This acquisition is the seventh by XPT.
Chicago-based global insurance brokerage Hub International Ltd. in July acquired the assets of GBC Benefits Ltd., d/b/a Gus Bates Insurance & Investments, located in Fort Worth, Texas. Gus Bates I&I provides retirement plan services, employee benefits, property/casualty and personal lines insurance. CEO Gus Bates and President Matt Morris joined Hub.
Houston, Texas-based insurance broker Insgroup Inc. acquired substantially all of the assets of the Harris F Underwood III Inc. agency in Dallas in February. HFU has been serving the needs of commercial and private clients in the DFW area for more than 40 years under the leadership of Chris Hill, co-founder, and Cash Harbaugh, president. Insgroup said it would use HFU’s office as a launching pad for growth in DFW in other verticals including construction, manufacturing, transportation, financial/professional services, as well as private clients. The entire Underwood team joined Insgroup and continues to operate at HFU’s location in downtown Dallas under the existing leadership of Harbaugh and Hill.
CRC Group, a Birmingham, Alabama-based nationwide wholesale broker, agreed in December to acquire the assets of Continental Underwriters. Headquartered in Covington, La., Continental provides primary marine, excess marine liabilities, ocean cargo and inland marine insurance. Led by CEO H. Elder Brown III and in business for 50 years, Continental Underwriters has additional offices in New York, N.Y.; Houston; Chicago; Knoxville, Tenn.; and Seattle. Fidelis Marine Underwriters and Fidelis Claims Services will also be included in the transaction. The Fidelis companies provide underwriting, broker services, claims management and loss control assistance. Continental will be part of CRC Group’s Programs Division.
Dallas-based Hilltop Holdings Inc. and Align Financial Holdings LLC (Align) in June completed the sale of Hilltop’s wholly owned Texas-based subsidiary, National Lloyds Corp. (National Lloyds), to Align. The transaction, which was first announced in January 2020, closed following the receipt of required regulatory approvals and the satisfaction of other customary closing conditions. Dallas-based National Lloyds is a specialty property insurer primarily serving owners of lower value homes and mobile homes. The company writes premiums through two subsidiaries, National Lloyds Insurance Co. and American Summit Insurance Co. (Carriers), and also has wholly owned agency and services businesses, including Nalico General Agency (Agencies). As part of its purchase of National Lloyds, Align concurrently sold the Carriers to ReAlign Insurance Holdings LLC (ReAlign) in an all-cash transaction. National Lloyds Insurance Co. has since rebranded as National Summit Insurance Co. The rebranding follows the completion of all regulatory approvals leading to the conversion of National Lloyds from a Texas Lloyds Plan company into a capital stock insurance company.
Topics Mergers & Acquisitions
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