Business Moves
Starr Aviation Agency, Chubb
Starr Aviation Agency Inc., a wholly-owned specialty subsidiary of C.V. Starr & Co. Inc. and The Chubb Corp. entered into an underwriting agreement under which Chubb will provide hull and liability coverage to Starr Aviation’s general aviation clients and workers’ compensation coverage to its general and commercial aviation clients.
The general aviation segment includes owners of corporate, private pleasure and small business aircraft, municipalities that own aircraft, sightseeing and air taxi services, aircraft service and maintenance firms, manufacturers of non-critical aircraft parts, and small regional airports. It does not include commercial airlines and manufacturers of airframes or critical parts, which are part of the commercial aviation segment.
Beazley, Asia Pacific Underwriting Agency
Beazley Group PLC increased its stake to 100 percent in Asia Pacific Underwriting Agency Ltd., a Hong Kong-based insurance underwriting agency that sources business throughout Asia from insurance intermediaries.
The decision reflects Beazley’s drive to expand its network to develop access to business in local markets under the Beazley brand. Under full ownership, Beazley expects to expand some product lines.
Established in Hong Kong in 1997, APUA is a specialist underwriter of professional indemnity, directors’ and officers’ liability, and non-financial institution crime and terrorism risks throughout Asia. Beazley has had a strategic partnership with APUA since 1997.
Report AXA, Winterthur
Reports from Agence France Presse, the Wall Street Journal and the New York Times note that AXA, with the assistance of investment bank Goldman Sachs, has been given a two week “exclusivity” to conduct an investigation of Winterthur, and to make an offer.
None of the companies involved have issued statements concerning the reports.
Credit Suisse merged with Winterthur in 1997. Soon after, rumors began circulating that it might be interested in the selling the business to concentrate on its core banking and financial management business.
The division has been struggling. The bank added $1.1 billion to its reserves in 2002 (See Insurance Journal Web site June 20, 2002). The division has already sold off several units, including most of its international operations to XL Capital in July 2001. It sold Churchill Insurance, its U.K. subsidiary, to the Royal Bank of Scotland for $1.82 billion in June 2003, and later that month sold its life and property-casualty operations in Italy to Compagnia Assicuratri Unipol for $1.7 billion.
This is not the first time that AXA has entered the picture as a potential buyer. In November 2004, the Financial Times reported AXA was in “serious discussions” with Credit Suisse to acquire Winterthur.
Those discussions went no further, and Credit Suisse had announced plans to make an initial public offering of Winterthur shares in 2006, perhaps selling of as much as 20 percent of the company.
AXA might have been better advised to stick with the earlier negotiations. Its offer in 2004, which Credit Suisse apparently rejected, was reportedly for $6.5 billion at that time. Winterthur, Switzerland’s largest domestic insurer, now is valued at around $8.1 billion.
Swiss Re, GEIS
Swiss Re and General Electric announced the completion of the sale of GE’s reinsurance business, GE Insurance Solutions, including Employers Reinsurance Corp., to Swiss Re for between $7.4 billion (according to Swiss Re) and $7.8 billion (according to GE) in cash and securities, plus the assumption of $1.7 billion in GEIS debt.
Swiss Re noted that the acquisition creates the world’s largest and most diversified global reinsurer. It plans to integrate GEIS operations into its own divisions during the next 18 months.
Swiss Re’s version of the financing of the acquisition states it paid: “$6.8 billion plus closing adjustments of $0.6 billion for a total of $7.4 billion. Between November 2005 and closing, the book value of GE Insurance Solutions further increased by $1.7 billion through cash capital contributions from General Electric and earnings which Swiss Re reimbursed to GE on closing.”
GE’s version states that it sold GEIS for $7.8 billion in cash and securities, plus the assumption of $1.7 billion in GE Insurance Solutions Corp debt.
Quanta, Chaucer
Quanta Capital Holdings Ltd. signed a non-binding “heads of agreement” with Chaucer Holdings PLC, a specialist Lloyd’s insurer, and the senior underwriting team of Syndicate 4000, under which a new managing agency, Pembroke Managing Agency Ltd., will be created.
The announcement comes shortly after A.M. Best lowered Quanta’s ratings (see Insurance Journal Web site June 8, 2006). The ratings were lowered following a series of financial setbacks that resulted in the major portion of the company’s specialty insurance and reinsurance lines being put into an “orderly run-off,” excluding its Lloyd’s and ESC operations (See Insurance Journal Web site March 3, May 26 and 31, 2006).
Pembroke, which will provide technical and administrative support and oversight to Syndicate 4000, is a joint venture among Quanta, Chaucer and the Syndicate 4000 underwriting team. Quanta believes that Pembroke will enable Syndicate 4000 to maintain and grow a long-term underwriting presence within Lloyd’s without requiring direct technical or administrative support from Quanta. It also enables the Syndicate to use the market capabilities of Chaucer and assures the long-term alignment of incentives with the underwriting management team. The agreement provides for Chaucer to hold a majority interest in Pembroke.
AXA, Paris Re
France’s AXA Group concluded a definitive agreement to cede its reinsurance operation — AXA Re and its subsidiaries — to Paris Re Holdings Ltd. As previously reported (See Insurance Journal Web site April 6 and 10, 2006), AXA had received a definitive off from the new capital venture. The deal will produce around $154 million in capital gains.
Paris Re Holdings is a newly created company with a capitalization of approximately $1.5 billion sponsored by a consortium of international investors led by Trident III L.P., a fund managed by Stone Point Capital LLC. MMC Capital, a unit of Marsh Inc, originally established Trident III as an investment vehicle. Other lead investors include Hellman & Friedman, Vestar Capital Partners, Crestview Capital Partners, ABN Amro and New Mountain Capital. AXA will take a stake of approximately 4 percent in Paris Re Holdings.
Under the terms of the agreement, the business of AXA RE is expected to be ceded in 2007 to Paris Re Holdings, with the risks and corresponding net income related to AXA Re’s 2006 claims experience accruing to Paris Re Holdings. AXA will continue to manage underwriting and claims for 2006 and prior years.
AXA also will guarantee the reserves pertaining to losses incurred on or before Dec. 31, 2005. The corresponding accounting results will be reported in the “other international insurance” segment starting June 30, 2006.
Completion of the transaction is subject to the satisfaction of various closing conditions including obtaining required regulatory approvals. During the transition period, a subsidiary of Paris Re will enter into an issuance and quota share agreement with AXA RE, permitting Paris Re to write business on AXA RE paper.
Oil Insurance
Oil Insurance Ltd, founded in Bermuda in 1971 by 16 energy companies as a mutual insurance company, announced that it is offering to purchase for cash any and all of its outstanding $300 million aggregate principal amount of deferrable subordinated debentures (the securities) due Aug. 15, 2033.
In connection with the offer, OIL is soliciting consents from holders of the securities to effect certain proposed amendments to the indenture governing the securities, including, among other things, the elimination of substantially all of the restrictive covenants and certain events of default and amendments of certain other provisions contained in the indenture.
The offer will commence on Monday, June 5, 2006, and will expire at 5 p.m. EST time on Friday, June 30, 2006, unless extended or earlier terminated, in either case, by OIL’s sole discretion. The consent solicitation will expire at 5 p.m. EST on Friday, June 16, 2006, unless extended (the “consent payment deadline”). Holders of securities wishing to sell must follow the instructions set forth in OIL’s Offer to Purchase and Consent Solicitation Statement dated June 5, 2006 (the “purchase offer”). The tender offer is not conditioned on a minimum percentage of tenders or on the closing of any securities offering or other financing, the company said.
Independent Insurance Wholesalers, Portland
Independent Insurance Wholesalers Inc. relocated its Portland, Ore., office. The new office is at: 121 S.W. Morrison, Ste. 325, Portland, OR 97204. Phone: 503-224-1956.
BNC Insurance Services, T.M. Richards & Associates
Phoenix-based BNC Insurance Services Inc., a subsidiary of BNC National Bank and its parent company, BNCCORP Inc., acquired the assets of T.M. Richards & Associates. The total consideration paid in the acquisition was valued at approximately $2 million, of which approximately $1.5 million was paid in cash and the remainder of which was paid in shares of BNCCORP Inc. common stock. The transaction was effective May 31, 2006.
Tom Richards and T.M. Richards & Associates are providers in the employee benefits field of insurance agencies. Richards has been a producer for more than 20 years. He will serve BNC Insurance Services Inc. as executive vice president of employee benefits.
BNC Insurance Services Inc., a subsidiary of BNC National Bank and its parent company BNCCORP Inc., offers a range of insurance products and services, as well as risk management and employee benefit administration.
USA Risk Group, Captive Insurance Managers of Phoenix
USA Risk Group is expanding its captive management office in Scottsdale, Ariz., with the purchase of Captive Insurance Managers of Phoenix LLC’s captive management business in Scottsdale. The management of USA Risk Group (West) Inc. will continue to be overseen by Marc Lapointe. CIMP staff will continue to work from their current locations through independent contractor arrangements. Office details are: USA Risk Group West Inc., 8149 E. Evans Road, Ste. C-08, Scottsdale, AZ 85260.
USA Risk Group is an independent provider to the alternative risk market, providing captive management, program administration, reinsurance and other related services in major North American domiciles. Web site: www.usarisk.com.
HRH, Thilman & Filippini
Insurance broker Hilb Rogal & Hobbs Co. agreed to buy substantial assets of Thilman & Filippini LLC, a Chicago-based insurance agency and brokerage firm with 2005 gross revenues of approximately $24 million. The Thilman Filippini team of more than 130 professionals will continue to serve clients from its downtown Chicago office under the leadership of its existing partners, E. Thomas Thilman, Thomas W. Filippini, John M. Atkinson, Peter J. Kunz and Eric M. Mezmar and the existing management in providing property and casualty and employee benefits insurance products and services.
The operation will become part of HRH’s Midwest Region led by HRH Vice President and Midwest Regional Director John P. (Jack) McGrath.
The transaction is expected to be completed by Aug. 1, 2006, subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act. Terms of the transaction were not disclosed. With completion of the Thilman Filippini transaction, HRH will have acquired more than $35 million in revenues (based on 2005 financial results) from four transactions in 2006.
IBA West, Woodland Hills, Calif.
The Insurance Brokers and Agents of the West Southern California office has moved from Glendale, Calif., to 21731 Ventura Blvd., Ste. 165, Woodland Hills, CA 91364. Phone: 818-226-0900. Fax: 818-888-1757.
Yates & Associates, Tustin, Calif.
Yates & Associates Insurance Services will be operating from a new location in Tustin, Calif., where it will have room to expand. The home office will be located off the 5 and 55 freeways at: 17822 East 17th Street, Tustin, CA 92789. The mailing address remains the same: P.O. Box 25133, Santa Ana, CA 92799-5133. Contact numbers also remain the same: 800-660-1125. Fax: 800-378-8588. Web site: www.yates-assoc.com.