Business Moves

Arthur J. Gallagher The HR Group

International insurance broker Arthur J. Gallagher & Co. reported it has acquired The HR Group, LLC of Brentwood, Tennessee. Terms of the transaction were not disclosed.

The HR Group offers employee benefits products and services along with human resource management consulting and outsourced benefits administration services.

Karen Saul and her associates will continue to operate in their current location under the direction of William Ziebell, North Central regional executive vice president of Gallagher’s employee benefit consulting and brokerage operations.

Kingsway, Alabama, Florida

Toronto-based Kingsway Financial Services Inc. said it would consolidate the operations of Southern United Fire Insurance Co., based in Mobile, Alabama, with Hamilton Risk Management, its subsidiary based in Miami, Florida.

The move comes after Kingsway reported a $17.4 million loss for the third quarter.

The company said that Roberto Espin has been appointed president and chief executive officer at Southern United. Espin will also continue in his current role as president and CEO of Hamilton Risk, which operates the insurance subsidiary, U.S. Security Insurance Co. U.S. Security is a predominantly non-standard automobile insurance carrier licensed in Florida and South Carolina.

The company said that the consolidation of the two companies would enable Hamilton Risk to continue its expansion plans into Southern United’s core profitable states.

Kingsway Financial also named Leslie DiMaggio as vice president, Operational Effectiveness. DiMaggio was formerly the president and CEO of Southern United.

Ebix Buys, ConfirmNet

Atlanta-based insurance software developer Ebix, Inc. said it has agreed to acquire San Diego based ConfirmNet Corp. effective Nov. 1, 2008.

ConfirmNet offers software for issuing and tracking certificates of insurance.

The deal will involve cash payments to ConfirmNet shareholders in the range of $10 to $11 million, varying based upon the fourth quarter revenue performance of ConfirmNet.

HopFed Bank, TARP

Kentucky’s HopFed Bancorp, Inc., holding company for Heritage Bank and Fall & Fall Insurance, has been preliminarily approved to participate in the U.S. Department of Treasury Capital Purchase Program (TARP). The company has 30 days to make a decision on its participation in the program.

HopFed Bancorp is eligible to receive a Treasury Department investment in the company’s preferred stock of up to $18.4 million.

John E. Peck, the bank’s president and CEO, said the funds would enhance the company’s lending and investment opportunities as well as provide capital to expand into new markets and to fund strategic acquisitions.

HopFed Bancorp, Inc. is a holding company of Heritage Bank headquartered in Hopkinsville, Kentucky. The bank has 18 offices in western Kentucky and middle Tennessee as well as Fall & Fall Insurance of Fulton, Kentucky; Heritage Solutions of Murray, Kentucky, Hopkinsville, Kentucky, Dickson, Tennessee, and Pleasant View, Tennessee and Heritage Mortgage Services of Clarksville, Tennessee.

Brown & Brown, Conner Strong

Florida- based Brown & Brown, Inc. said it has agreed to acquire the small business insurance unit of Conner Strong Companies, Inc., which is headquartered in Cherry Hill, New Jersey.

The small business insurance unit has annualized revenues of approximately $9.3 million from commercial insurance and employee benefits. The agency has locations in New Jersey, Pennsylvania and Delaware.

The deal is expected to close in January of 2009.

As part of the transaction, Joseph P. Morrissey, Jr., who is executive vice president of Select Commercial for Conner Strong, will join Brown & Brown as leader of the acquired commercial lines operations. Additionally, Brown & Brown will have two new mid-Atlantic locations as a result of the transaction.

Wright Risk Management, Aquiline Capital

Wright Risk Management LLC, a risk financing and insurance management company, and Aquiline Capital Partners LLC, a New York based private equity firm, have formed WRM America Holdings, a specialty lines property and casualty insurance holding company.

Officials said that the company will initially serve the insurance needs of the education market and plans to grow into the not-for-profit and municipal markets nationally.

Since WRM currently manages the operations of the New York Schools Insurance Reciprocal (NYSIR), and the New York Municipal Insurance Reciprocal (NYMIR), they said WRM America will not underwrite public entities in New York State.

WRM America, headquartered in Uniondale, N.Y., will provide education insurance programs to private and public K-12 schools, colleges and universities. WRM America Indemnity, the underwriting subsidiary of the company, has received a financial strength rating of A- (Excellent) from A.M. Best.

Wright Risk Management has become a wholly owned subsidiary of WRM America and will provide WRM America and its other subsidiaries with underwriting, marketing, administrative, accounting, information technology, risk management, and claims management infrastructure, as well as extending on a national scale the model Wright Risk Management has built in New York State.

William J. Fishlinger founded Wright Risk Management in 1978 and will serve as chairman and CEO of WRM America. Gerard P. Elicks, president of Wright Risk Management since 2000, will continue in that role. Steven Sims, a 30-year veteran of the insurance industry, will serve as president of WRM America Indemnity.

State Auto, Rockhill Insurance State

Automobile Mutual Insurance Co. has agreed to acquire Rockhill Insurance Group of Kansas City, Mo. Closing is expected in the first quarter of 2009.

Rockhill Insurance Group, which has its corporation based in Delaware, but companies in Kansas, writes approximately $135 million in specialty property and casualty direct written premium through four insurance company subsidiaries: Rockhill Insurance Co., Plaza Insurance Co., American Compensation Insurance Co., and Bloomington Compensation Insurance Co.

Key business segments for Rockhill include commercial property, general liability for residential construction, commercial umbrella and surety; RTW, a monoline workers’ compensation company; and Absentia, a third party administrator providing workers’ compensation claim and loss control services.

Rockhill writes business on a non-admitted basis in 49 states and the District of Columbia, and is licensed on an admitted basis in 42 states and the District of Columbia.

State Auto said it intends to retain Rockhill’s management and associates, operating the company as a stand alone subsidiary of State Automobile Mutual. State Automobile Mutual does not plan to pool Rockhill’s operations with those of State Auto’s for the foreseeable future.

The State Auto Insurance Companies, headquartered in Columbus, Ohio, are engaged primarily in writing personal and business insurance products exclusively through approximately 3,400 independent insurance agencies in 33 states.

Zurich, Russia

Zurich Financial Services Group has completed the acquisition of a remaining 34 percent minority stake in Russia’s NASTA Insurance Co., which was renamed Zurich Retail Insurance Ltd. at the end of 2007.

Zurich said the purchase price was around $205 million, and that all necessary regulatory approvals to close the transaction have been obtained.

Zurich acquired a 66 percent majority stake in NASTA in February 2007 with an agreed path to 100 percent ownership by 2010. Zurich Retail Insurance Ltd. is now the largest foreign controlled general insurer exclusively operating under an international brand in the Russian market.”

AIG

American International Group Inc. said that it is terminating 14 voluntary deferred compensation programs involving 5,600 employees and independent agents and representatives.

Approximately $500 million in earned but deferred pay will be distributed in the first quarter of 2009.

This deferred compensation is all pay that an individual earned but volunteered to defer receiving until a later date. In each case, an employee could leave AIG for any reason and be entitled to this deferred pay.

“AIG has decided to terminate and pay out the deferred pay plans to remove the incentive for employees to leave in order to obtain their deferred pay,” said Andrew Kaslow, senior vice president, Human Resources.

“Many AIG employees have seen their life savings wiped out in the financial crisis,” Kaslow said. “Employees are now concerned about obtaining the pay they have earned but deferred so they can pay for retirement, college tuition or other expenses.”

Under the majority of AIG’s deferred pay plans, participants can only access deferred pay when they retire or leave the company. AIG said it is concerned that employees will leave AIG so they can obtain their deferred pay. This is a concern at a time when AIG is working to maintain the value of its businesses, whether those businesses are to be sold to repay AIG’s Federal Reserve loan or to be continued as part of a restructured AIG.

Philadelphia, Tokio Marine

Philadelphia Consolidated Holding Corp. reported that the Financial Services Agency of Japan has approved its acquisition by Tokio Marine Holdings, Inc. Tokio Marine is acquiring all outstanding shares of the insurer for $61.50 per share in cash.

Tokio Marine previously received approval Pennsylvania and Florida insurance departments.

The closing of the merger remains subject to other closing conditions, but no additional regulatory approvals are required.

The parties anticipate that the closing of the merger will occur on Dec. 1, 2008.

Philadelphia underwrites commercial property/casualty and professional liability insurance products.

Topics Florida USA New York Russia Kentucky Tennessee AIG