Stock Prices: The turbulent stock market is not sparing commercial property/casualty insurers. Through the first nine months of the year stocks are down 14 percent in the sector.
M&A Activity: Despite the current equity markets, activity in the P/C insurance sector remains at historic highs in this ongoing soft market.
Tokio Marine Holdings Inc. (TMHD) and Philadelphia Consolidated Holding Corp. (Nasdaq:PHLY) announced they have entered into a definitive agreement under which TMHD will acquire all outstanding shares of Philadelphia Consolidated for $61.50 per share in cash through TMHD’s wholly owned subsidiary, Tokio Marine & Nichido Fire Insurance Co. Ltd. Philadelphia Consolidated, a U.S. company offering specialty commercial property/ casualty products and services for targeted markets, will provide Tokio Marine with a solid platform for its P/C business in the U.S. through their 47 offices and approximately 1,400 employees. The purchase price represents a 70 percent premium to PHLY’s previous day stock close and a three times multiple on PHLY’s GAAP Equity.
The PHLY deal comes a month after Darwin Professional Underwriters Inc. (NYSE:DR) was acquired by Allied World Assurance Co. Holdings Ltd (NYSE:AWH) for a two times multiple on their GAAP Equity and 13 times the company’s trailing 12 months earnings.
Tower Group Inc. (Nasdaq:TWGP) and CastlePoint Holdings Ltd. (Nasdaq:CPHL) announced that CastlePoint Reinsurance Co. Ltd., a Bermuda-based subsidiary of CastlePoint, entered into a definitive agreement to acquire HIG Inc. (Hermitage). Hermitage is a specialty property/casualty insurance holding company offering both admitted and excess and surplus products to small commercial customers throughout the eastern United States. Hermitage has two operating subsidiaries: Hermitage Insurance Co. and Kodiak Insurance Co. Hermitage is expected to produce approximately $100 million in gross written premiums for 2008. Hermitage is rated “B++” (Positive) by A.M. Best.
The Hanover Insurance Group Inc. (NYSE:THG) and AIX Holdings Inc. announced they have entered into a definitive agreement through which The Hanover will purchase all of the stock of AIX Holdings. The Windsor, Conn.-based AIX Holdings is a specialty property/casualty insurance carrier that focuses on underwriting and managing program business utilizing alternative risk transfer techniques. AIX Holdings has developed general liability, workers’ compensation, property, and auto liability programs for a range of well-defined, under-served markets where there are specialty coverage or risk management needs. The company had gross written premiums of $85 million in 2007, and has an “A-” (Excellent) rating with A.M. Best.
The workers’ compensation arena continues to be engaged in transactions. The sector experienced increased activity in 2006 and has shown little signs of slowing down in 2008.
Eastern Insurance Holdings Inc. (Nasdaq:EIHI) announced it executed a definitive agreement to acquire Employers Security Holding Co. and subsidiaries. Employers’ wholly owned subsidiary is Employers Security Insurance Co., an Indianapolis, Ind.-based mono-line workers’ compensation insurance company. Employers is domiciled in Indiana and also holds licenses in Illinois and Missouri. The acquisition will expand EIHI’s workers’ compensation insurance operations into Indiana and ultimately other select Midwest states.
Topics Mergers & Acquisitions USA Carriers Commercial Lines Workers' Compensation Excess Surplus Property Property Casualty
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