Business Moves

Hanover, Chaucer

A half-billion dollar deal that would make Lloyd’s insurer Chaucer part of Massachusetts-based The Hanover is in the works. The transaction involves a cash-for-stock swap valued at $510 million, which The Hanover said it plans to pay for with cash on hand as well as a $250 million debt issue to fund the purchase.

Chaucer is one of Lloyd’s 10 largest MGAs and underwrites specialty insurance in marine, energy, non-marine and aviation, as well as auto insurance in the UK. Chaucer reported gross written premium of $1.3 billion in 2010. The London-based company has regional operations in Whitstable, England and international operations in Houston, Singapore, Buenos Aires and Copenhagen.

Keystone

Keystone Insurers Group is expanding its presence in Tennessee by teaming up with four new franchise partners.

E.B. Thom & Sons in Tullahoma, McIntire & Associates Insurance Inc. in Cleveland, Porch-Stribling-Webb Inc. in Waverly, and Art E. Gernt in Crossville have all joined Keystone, significantly expanding the group’s involvement in Tennessee’s market, according to KIG Tennessee State Vice President Doug Dukes.

Chartis, National Indemnity

American International Group said that its global property/casualty insurer Chartis will transfer the bulk of its legacy asbestos liabilities to National Indemnity Co. (NICO), a subsidiary of Berkshire Hathaway Inc. The transaction covers potentially volatile U.S.-related asbestos exposures. Chartis said the deal does not cover asbestos accounts that it believes have already been reserved to their limit or other ancillary asbestos exposure assumed by Chartis affiliates.

Effective as of Jan. 1, 2011, Chartis will cede the bulk of its net asbestos liabilities to NICO under a retroactive reinsurance agreement with an aggregate limit of $3.5 billion. Chartis will pay NICO approximately $1.65 billion.

For those asbestos claims subject to the reinsurance from NICO, NICO will assume responsibility for claims handling. It will also assume collection responsibility and collectability risk for third-party reinsurance related to those claims, according to Chartis.

The asbestos deal comes after Chartis reported a fourth quarter operating loss of $4.0 billion, due to the reserve additions of $4.2 billion, approximately 80 percent of which were for four long-tail lines of business: including asbestos.

Last July, CNA Insurance announced a similar asbestos liability deal with National Indemnity for a payment of $2 billion. In 2006, Berkshire took on $7.1 billion of claims from the Equitas affiliate of Lloyd’s of London.

Topics Tennessee