OneBeacon, Tower Group
Massachusetts-based OneBeacon Insurance Group has agreed to sell its personal lines business to Tower Group Inc. in a deal that comprises two affiliate insurers and two reciprocal insurance exchanges in New York and New Jersey.
The agreement calls for New York-based Tower to pay $78 million to acquire Massachusetts Homeland Insurance Co. and York Insurance Co. of Maine as well as New Jersey Skylands Management and Adirondack AIF, the attorneys-in-fact for the reciprocal insurers Skylands Insurance Co. and Adirondack Insurance Exchange.
The transaction is valued at around $180 million and is expected to close at the end of the second quarter.
Net written premium for the affected books was approximately $420 million in 2009.
Tower said the combination will create a distinct business segment with annualized premiums of approximately $700 million. Tower expects to hire the majority of OneBeacon’s personal lines employees and plans to use OneBeacon’s products and systems.
OneBeacon CEO Mike Miller said the transaction “will complete OneBeacon’s transformation into a specialty company.”
OneBeacon will retain all of its specialty lines including the collector car and boat business produced through Hagerty Insurance and the personal lines assigned risk business written through AutoOne.
Miller said the sale will “free up significant capital” and reduce the insurer’s catastrophe exposure.
Michael Lee, president and CEO of Tower, said the transaction will strengthen its personal lines offerings and generate additional fee income from the management of the reciprocals. The deal expands Tower’s suite of personal lines insurance products to include private passenger automobile, homeowners, umbrella, and the signature package product, OneChoice CustomPac, which provides customers with one policy for all of their homeowners, auto and umbrella needs.
Lee said Tower gains access to more than 900 retail agencies in the Northeast and the potential for cross-selling of non-personal lines products to new agents through Tower’s existing companies. It also potentially expands Tower’s personal lines product offerings to territories outside the Northeast and into market segments such as non-standard auto and alternative distribution sources.
Standard & Poor’s Ratings Services placed its ‘BBB’ counterparty credit ratings on OneBeacon and its Bermuda-based holding company White Mountains Insurance Group Ltd. on CreditWatch with negative implications, citing this sale and OneBeacon’s Dec. 3 sale of the renewal rights on its non-specialty commercial lines business to Hanover Insurance Group Inc. S&p credit analyst Laline Carvalho said the two sales will result in OneBeacon’s net premiums written dropping by about 50 percent as it pursues its strategy of becoming a specialty-focused company. “In our view, this change in OneBeacon’s business profile is significant and represents a meaningful reduction in OneBeacon’s diversification by product lines and by sources of overall operating profitability compared to prior years,” she said.
United P&C
United Property & Casualty Insurance Co. in Florida said it is seeking approval to write homeowners insurance in Massachusetts, Connecticut, Rhode Island, New York, North Carolina, South Carolina and New Jersey.
The company, which opened for business in 1999, currently writes 96,000 homeowners, dwelling fire, and flood policies throughout Florida, and said it expects to be able to offer similar products in the expansion states. It now writes a small amount (7 percent of its premium) of commercial insurance.
“We decided that the time was right to explore other markets and potentially expand our geographic footprint,” said Don Cronin, CEO, “and we think United’s products particularly fit the needs of homeowners in these regions of the United States.”
He said his firm’s experience in Florida will be helpful as it expands into new markets.
The St. Petersburg-based company went public in September 2008 when it merged with FMG Acquisition Corp. It distributes it products through independent agency groups.
United Insurance Holdings Corp. conducts business through three subsidiaries: United Property & Casualty Co., a licensed insurer; United Insurance Management, L.C., a managing general agency; and Skyway Claims Services, LLC, a claims adjusting service. Since its inception in 1999, United Insurance Holdings Corp. has reported a profit every year, even during the hurricane heavy years of 2004 and 2005. In 2008, it posted net income of $33.4 million
NSM, Condon & Skelly
NSM Insurance Group acquired Condon & Skelly Collectible Vehicle Insurance, one of the original insurance brokers for the antique, classic car, and street rod market. Terms of the acquisition were not disclosed.
Today the industry of classic and antique vehicle insurance is a $1 billion industry and the market continues to grow despite tough economic times, said Geof McKernan, CEO of NSM Insurance Group.
The specialty niche market is a perfect fit for NSM Insurance, McKernan said. “We saw the great brand and want to improve on that,” McKernan said, adding that NSM will also be able to offer enhancements to the current policies and forms.
NSM Insurance Group is a national program administrator with offices in five states. Condon & Skelly will continue to operate in Maple Shade, N.J.
Keystone Group
Five more insurance agencies have joined the Keystone Insurers Group in Kentucky, bringing to 11 the total number of KIG agencies in the state.
The latest to join are Hayes-Utley-Hedgspeth, Moore Insurance, Cambridge Insurance, Wooten Insurance and Johnson-Pohlmann. These five join KIG’s network of more than 200 agencies in six states.
KIG announced in early January the addition of two Kentucky agencies and then later in the month, signed four more.
Regarding the latest additions, Hayes-Utley-Hedgspeth is owned by Ken Hayes, Jr. and Glen Hedgspeth. Moore Insurance is owned by David Moore. The principals of Cambridge Insurance in Lexington are J. Carson Evans, Joe Browne Nicholson and Paul Ferrell. Wooten Insurance in Scottsville and is owned by Jordan Clarke. Johnson-Pohlmann Insurance is in Danville, where the principals are Scott Burks, Ray Whitehouse and John Funkhouser.
Topics Florida New York New Jersey Massachusetts
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