Business Moves

Hub, Apax, Morgan Stanley

Hub International Limited, which got its start in 1998 when 11 Canadian brokers merged and has since grown through acquisitions into one of the largest insurance brokers in North America, is being acquired by funds advised by Apax Partners together with Morgan Stanley Principal Investments in a transaction worth $1.8 billion.

Hub shareholders will receive $40.00 per share in cash, representing a premium of 28 percent to the 90-trading day average closing stock price on the New York Stock Exchange. The transaction values Hub at approximately $1.8 billion, which includes $1.7 billion of fully diluted equity and $145 million of debt.

There is no financing condition to consummate the transaction. The transaction will be financed through equity contributed by Apax, MSPI and members of management, and debt financing that has been committed by Morgan Stanley and Merrill Lynch & Co. Senior members of Hub’s management team have already committed to invest in excess of $65 million in the transaction, which should close toward the end of the second quarter of 2007.

Royal Sun, Arrowpoint

Arrowpoint Capital Corp. in Charlotte, N.C. has completed the acquisition of all Royal & SunAlliance USA businesses formerly owned by Royal & Sun Alliance Insurance Group plc of London. Arrowpoint Capital Corp. was formed in June 2006 by the senior management and outside directors of Royal & SunAlliance USA. Arrowpoint agreed to terms of the transaction approved by Delaware Insurance Commissioner Matthew Denn.

Arrowpoint Capital management purchased 100 percent of the interests of Arrowpoint General Partnership, the U.S. holding entity which owned the R&SA USA businesses, for $300 million of deferred consideration. At the close, the London group contributed $287.5 million to the U.S.-regulated entities.

The company is being led by former R&SA USA President and CEO John Tighe and his senior managers, who have headed the U.S. operation since 2003. The Arrowpoint board will include Michael Crall, formerly CEO of Equitas and president of Argonaut Insurance Co., who serves as chairman; Edward Muhl, former New York and Maryland insurance commissioner; and Larry Simmons, former president and CEO of Royal & Sun Alliance Insurance Co. of Canada and Western Assurance Co.

Denn approved the management buyout last month in ruling that there is essentially no legal or financial basis upon which he could reject the buyout; although he required that Royal UK agree to certain conditions. Denn required that the British parent company submit to the jurisdiction of his department and Delaware state courts for any policyholder disputes. He also wanted the company to obtain state approval for certain payouts to management.

While Royal and Sun’s British put $287.5 million into the buyout, it said it will not supply any additional funds for the U.S. Some policyholders, including World Trade Center lessees contended that $287.5 million might not be sufficient to cover outstanding World Trade Center, asbestos and other potential claims. But Denn ruled that the it should be sufficient to pay unresolved claims.

Maguire Insurance Agency, Fitness and Wellness Insurance Agency

Maguire Insurance Agency Inc., a subsidiary of Philadelphia Consolidated Holding Corp (PHLY), purchased the renewal rights to the policies issued through the Fitness and Wellness Insurance Agency of Solana Beach, Calif., its service marks and rights related to the risk purchasing group. Maguire Insurance Agency Inc. will retain the services of Jeffrey Frick, and Deborah Grady, former principals of the Fitness and Wellness Insurance Agency as well as the majority of the Fitness and Wellness staff. Fitness and Wellness specializes in insurance for the fitness and wellness industry servicing both personal instructors and commercial health clubs.

Bollinger, Peter Duffy and Patchett, Grode & Topp

Bollinger Inc. acquired the Peter Duffy Agency in Green Village, N.J. and Patchett, Grode and Topp, in Wyckoff, N.J. The Peter Duffy Agency, a surety bond specialty agency, will relocate to Bollinger’s headquarters in Short Hills, N.J. Peter Duffy is an expert in the field of surety bonds and serves many large construction firms.

This acquisition will expand Bollinger’s presence in this specialty area. Patchett, Grode and Topp is a personal and commercial lines agency employing 22 professionals in its Wyckoff office. John Topp will continue as a consultant to his many clients.

Topics USA