Business Moves

Royal Sun, Arrowpoint Capital

Delaware Insurance Commissioner Matthew Denn conditionally approved a management buyout of Royal and Sun Alliance Insurance Group’s U.S. operations.

Denn ruled that there is no legal or financial basis to reject the buyout, although he stressed that he finds the British parent’s spinning off of its U.S. operations unfair.

Before it can proceed with the buyout, Royal UK must agree to certain conditions, according to Denn. He is insisting that the British parent company submit to the jurisdiction of his department and Delaware state courts policyholder disputes. He also wants the company to obtain state approval for certain payouts to management and to pay for an entity to monitor its reserves and claims practices.

Royal and Sun’s British parent agreed to put $287.5 million into the buyout of its four U.S. subsidiaries by a group using the name Arrowpoint Capital. The British firm says it will not supply additional funds for the U.S. operations in the future.

However, some policyholders, including World Trade Center lessees, opposed the buyout, contending that $287.5 million may not be sufficient to cover outstanding WTC asbestos and other potential claims.

But Denn upheld the previous findings of his hearing officer that the $287.5 million should be sufficient to pay unresolved claims. He also dismissed objectors’ contention that the British parent would continue to fund the U.S. subsidiary if the buyout plan were blocked.

Royal and Sun Alliance Insurance Group did not immediately indicate whether Denn’s conditional approval was acceptable.

Maguire, Fitness and Wellness

Maguire Insurance Agency Inc., a subsidiary of Philadelphia Consolidated Holding Corp., purchased renewal rights to policies issued through Fitness and Wellness Insurance Agency of Solana Beach, Calif., its service marks and rights related to the risk purchasing group.

Maguire Insurance will retain the services of Jeffrey Frick and Deborah Grady, former principals at Fitness and Wellness, as well as the majority of the staff. Operations will continue from the same location in California.

Blackstone, DLJ Merchant and Aspen

Bermuda’s Aspen Insurance Holdings Ltd. announced that two of its shareholders, The Blackstone Group and DLJ Merchant Banking Partners, have agreed to sell shareholdings.

Blackstone said it will sell 5.7 million ordinary shares, and DLJ Merchant will sell 2.2 million ordinary shares in an underwritten public offering at $26.70 per share.

Allianz, Sistema and ROSNO

Spain’s Sistema and Germany’s Allianz signed a share purchase agreement, whereby Allianz becomes the major shareholder of one of Russia’s largest insurers, ROSNO Group. Allianz stated it now holds approximately 97 percent in ROSNO, while Sistema holds approximately 3 percent.

SCOR, Converium

France’s SCOR Group acquired 32.9 percent of the share capital of Swiss-based reinsurer Converium Holding AG, stating it believes the combination of Converium and SCOR is a strategic opportunity to create a “top five” global multi-line reinsurer.

SCOR acquired the shares through direct market purchases and share purchase agreements, subject to regulatory approvals. The consideration for the block acquisitions consists of 20 percent cash and 80 percent newly issued SCOR shares.

Zurich, NASTA

The Zurich Financial Services Group agreed to purchase a majority stake in NASTA Insurance Co., based in Moscow. The transaction should close in the first half year 2007, pending Russian regulatory approvals. The transaction will give Zurich a 66 percent share in NASTA and an agreed path to 100 percent ownership by 2010. Both parties agreed not to disclose the price of the transaction.

U.S. Risk, E.M. Morrow Agency

U.S. Risk Insurance Group Inc. expanded its California operations by acquiring E.M. Morrow Insurance General Agency Inc. in Oakland, Calif. E.M. Morrow’s management, including principal David Barkley, will continue to operate the agency. It will become a subsidiary office of U.S. Risk of California Inc., which does business as USRisk Brokers Insurance Services Inc., and is headquartered in Irvine, Calif.

M.J. Hall and Cravens, Leffler

& McCormick

M.J. Hall and Co. based in Stockton, Calif., acquired Walnut Creek, Calif.-based Cravens, Leffler and McCormick’s book of insurance business in an asset purchase.

Cravens, Leffler and McCormick’s operations and staff will be relocating to San Francisco to become the San Francisco branch of M.J. Hall. Frank Cravens will serve as vice president and branch manager of the San Francisco office.

The relationship between the Cravens family and the Hall family goes back decades. Michael Hall, the founder of M.J. Hall, began his U.S. insurance career with Cravens, Dargan in San Francisco in 1964.

With the addition of the San Francisco office M.J. Hall now has seven offices on the west coast.

Sierra Summit Surety Insurance Services

Sierra Summit Surety Insurance Services, as managing general agents for Arch Insurance Co., opened two Southern California locations, one in Pasadena and one in Rancho Cucamonga. Both offices write surety bonds, according to Bill Shupper, vice president/CFO and Ray Gail, president.

Shupper and Gail previously worked together at Lou Jones and Associates. Shupper began his surety career in 1979 at Lou Jones and was elevated to president/CEO in 1993. The firm was acquired by Kemper in 1998. Shupper maintained his contacts in the industry as an independent surety consultant for more than five years.

Gail began his surety career in 1984 with Lou Jones and Associates. In 1992, he joined Austin, Cooper and Price as bond manager. However, after a short stint with ACP, he returned in 1994 to work again with Shupper at Lou Jones and Associates. For the next nine years, which extended through the acquisition of Lou Jones by Kemper Insurance, Gail held the position of chief operating officer. In 2003, Gail moved to Arch Insurance as assistant vice president of Surety.

Topics California USA Allianz