Business Moves

Marsh

Marsh & McLennan Companies Inc., the No. 2 global insurance broker, said the 2008 restructuring at Marsh Inc., its flagship insurance brokerage unit, was on track to generate annual savings of $200 million, and it plans further spending cuts in its consulting units.

Fourth-quarter net income fell 6 percent to $80 million, while revenue fell 9 percent to $2.7 billion. Revenue at Marsh Inc. fell 5 percent to $1.1 billion, but rose 1 percent in North America, a region that accounts for more than half its revenue.

Marsh & McLennan has been restructuring to boost savings after an industry wide probe in 2005 led big brokerages to drop lucrative commissions they had received from insurers. The company, which was the biggest insurance broker before slipping behind Aon last year, cut about 1,900 jobs in 2008 and outsourced another 700. It plans more cuts in 2009.

Beazley, First State

London-based insurer and reinsurer Beazley Group is acquiring Boston-based First State Management Group, an underwriting manager specializing in excess and surplus lines commercial property insurance for $35.4 million in cash.

First State is a subsidiary of The Hartford Financial Service Group and is led by president and chief operating officer Judy Patterson.

The acquisition will increase Beazley’s presence as an insurer of mid-sized U.S. commercial property business that does not normally come to Lloyd’s. Officials said that First State plans to underwrite around $150 million of gross premium for 2009, balancing the specialty lines business — professional and management liability business— that Beazley has been writing locally in the U.S. since 2005.

The Hartford said the move is part of its strategy of moving away from excess and surplus lines business and was not triggered by recent troubles with its life insurance operations. “This is an agreement we have been working on for many months. We are entering into this transaction to reduce our exposure to excess and surplus lines property insurance, which is not core to our business,” said Gary Thompson, executive vice president of The Hartford’s property and casualty middle market and specialty lines insurance.

Thompson said First State’s livestock and nursing home programs would transition directly to The Hartford.

AIG, Zurich

American International Group is in advanced talks to sell its U.S. auto insurance unit to Swiss insurer Zurich Financial Services AG, Reuters reported citing a source familiar with the matter said. The auto insurance business is expected to fetch around $2 billion, the source said.

The unit being sold includes the 21st Century Insurance Group business, which AIG took over in 2007.

Since it announced it would sell certain subsidiaries, AIG has sold HSB Group to German reinsurer Munich Re for $742 million and its Canadian life insurance unit to Bank of Montreal for about C$375 million.

Unitrin, Direct Response

Trinity Universal Insurance Co., a Unitrin, Inc. subsidiary, has completed its previously announced acquisition of Direct Response Corp. and its subsidiaries for $200 million in cash.

Direct Response is based in Meriden, Connecticut and specializes in the sale of personal auto insurance directly to consumers under both the Response Insurance and Teachers Insurance Plan brand names. For the year ended Dec. 31, 2008, Direct Response recorded direct written premiums of $156 million.

Donald G. Southwell, Unitrin’s chief executive officer, said Direct Response will continue to market its products under the Response Insurance and Teachers Insurance Plan brand names and will be reported as part of the Unitrin Direct business segment.

Unitrin’s brands include Kemper, Unitrin Specialty and Unitrin Direct.

PGI, Underwriters & Brokers of Michigan

PGI Commercial has acquired the assets of Underwriters & Brokers, Inc. of Troy, Michigan. PGIC said it would merge the platform and staff of UBI with its existing Michigan office.

Underwriters & Brokers, Inc. handles middle-market commercial risks with a focus on professional liability and liquor liability lines of business.

PGI Commercial (PGIC) is part of the Bermuda-based insurance distributor Primary Group Limited and manages property and casualty programs nationwide.

Valiant

New York-based specialty insurer Valiant Insurance Group, Inc. has established a new insurance vehicle, Valiant Specialty Insurance Co., a Delaware-licensed property/ casualty insurance company to serve as the excess and surplus lines insurance carrier for Valiant’s U.S. operations.

Valiant is currently able to offer surplus lines capability to clients in a majority of the U.S. states and said it intends to continue to seek additional state surplus lines eligibilities for Valiant Specialty Insurance Co.

Gary Dubois, president and CEO of Valiant, said that the new carrier, together with the broadly-licensed admitted carrier, Valiant Insurance Co., means his firm can provide a wider range of commercial insurance products. Current product offerings include professional liability, marine, casualty and management liability. Valiant Insurance Group is a subsidiary of Ariel Holdings Ltd.

Merchants National E&S

Buffalo, N.Y.-based Merchants National Insurance Company, a wholly-owned excess and surplus lines subsidiary of Merchants Insurance Group, began accepting new business on Feb. 1, 2009. The company reported as of that date it has been approved in the 10 states of Alabama, Georgia, Louisiana, Michigan, Mississippi, North Carolina, Ohio, Pennsylvania, Texas and Vermont.

The new company targets franchised hotels and motels, and writes the business in conjunction with Southern Hospitality Underwriters, a Georgia-based wholesale brokerage agency that specializes in business insurance for the hotel industry.