Business Moves

Max Specialty

Max Specialty Insurance Co., of Richmond, Virginia, the U.S. excess and surplus lines unit of the Bermuda-based Max Capital Group Ltd., has agreed to acquire a U.S.-based admitted insurance company licensed to write business in all 50 states plus the District of Columbia. The name of the company, and the seller have not yet been disclosed, nor were the terms of the transaction.

Upon completion of the transaction, Max Specialty’s underwriting team will be able to write both admitted and non-admitted business,the the company said.

The operation that Max Cap is acquiring will “primarily support the Max Specialty team’s previously announced entry into inland and ocean marine underwriting,” said the announcement.

Max Specialty, the non-admitted company, is licensed in Delaware and currently approved in 46 other states.

Arthur J. Gallagher, Healthcare Risk

Illinois-based Arthur J. Gallagher & Co. has acquired Healthcare Risk Solutions, LLC headquartered in Fort Washington, Pennsylvania. Terms were not disclosed.

Founded in 2002, Healthcare Risk Solutions, LLC is a property/casualty retail insurance broker providing professional liability insurance products, associated risk mitigation consulting services and specialized program management exclusively to the medical community in the mid-Atlantic and Northeast states.

William Carey, Edmund Lynch and their associates will continue to operate from their Fort Washington office, with a satellite location in each of Connecticut, Massachusetts and New Jersey, under the direction of Douglas Brown, Northeast regional manager of Gallagher’s property/casualty brokerage operations.

J. Patrick Gallagher, Jr., chairman, president and CEO, said the new acquisition’s specialization will complement his firm’s professional liability insurance product niche strategy.

West Va. insurer BrickStreet’s days of profits may be numbered

BrickStreet Insurance’s profit from running West Virginia’s workers’ compensation program more than doubled in its second year of business, but those heady days could be ending.

In July, the company will face competition from other insurers for the first time. The consequences of that – higher costs, lower revenue – will bring huge profits to an end, the company’s top executive believes.

“The workers’ compensation market will open to competition this summer and, given the competition, our overhead is going to increase because our premium levels are going to go down,” said Greg Burton, the company’s president and chief executive officer. “Then add on that we’re going to start paying taxes in the future, this level of profit probably won’t happen again.”

BrickStreet reported a 2007 profit of $185 million, compared to $70.7 million in 2006.

The company has benefited from its federal tax exemption. Over the two years it has been in business, Brickstreet has avoided paying $194 million in taxes under the three-year tax exemption secured for it by the state.

“We continue to provide better customer service, and we got injured workers back to work faster in ’07 than ’06, but we also don’t pay taxes right now,” Burton said.

The company was created from the state Workers’ Compensation Division in 2006, and the state law creating it bestowed the tax break and monopoly status, which comes to an end July 1.

Burton expects big competitors to include American Insurance Group, State Farm and Nationwide, among others.

Most of the 2007 profit will go toward increasing reserves, but BrickStreet says part of the windfall may go to help repay $185 million it owes on a startup loan it received from the state in 2006.

BrickStreet has to repay $40 million on July 1, but the company says it is seeking state permission to pay an extra $50 million to $60 million this year.

Burton says BrickStreet wants to get out of debt quickly and also hopes to begin paying dividends to policyholders.

Topics A.J. Gallagher