Business Moves
Progressive Drive, Homesite
Drive Insurance from Progressive, a writer of auto insurance through independent agents and brokers in the United States, signed a joint marketing agreement with Homesite Insurance Group, a national provider of home insurance products.
The agreement will allow selected Drive agents in Ohio, Pennsylvania and Oregon to provide their Drive auto insurance customers quotes for homeowners, renters and condo insurance policies underwritten and serviced by Homesite.
New or existing Drive insurance customers are eligible for a homeowners quote from Homesite if they have prior auto coverage without a lapse and at least 100/300 liability limits.
Drive and Homesite will work together to identify a hand-selected group of about 150 agents in the three states to whom the program will be offered. Drive agents will sign an agency agreement and be appointed by Homesite to become an agent of record owning expiration rights to policies sold.
Further rollout may occur in 2007.
The products and services of the Drive Group of Progressive Insurance Companies are marketed to consumers under the Drive Insurance from Progressive brand through more than 30,000 independent insurance agencies in the United States.
Founded in 1997, the Homesite Insurance Group writes homeowners, condominium owners, and renters insurance policies in 46 states and the District of Columbia.
Safeco
Safeco announced it has executed a Rule 10b5-1 trading plan to purchase up to $250 million of its outstanding shares of common stock. A Rule 10b5-1 plan allows Safeco to repurchase its shares during periods when the company would normally not be active in the market because of its own internal trading windows.
On Aug. 11, 2006, Safeco reported that its board of directors had increased the company’s share repurchase authorization to 10 million shares, which is equal to 8.6 percent of Safeco’s shares outstanding at June 30, 2006. If the current 10b5-1 program is fully executed, approximately 5 million shares will remain available for repurchase under board-approved repurchase programs.
Since 2003, Safeco has repurchased 27.5 million shares, or 19.9 percent of its then-outstanding shares, at a total cost of $1.4 billion.
Meanwhile, the company also declared a regular dividend of $0.30 per share on its common stock. The dividend is payable October 23, 2006, to shareholders of record on Oct. 6, 2006.
Crawford, TPA Broadspire
Insurance claims management firm Crawford & Co. and Platinum Equity signed a deal under which Crawford will acquire Platinum’s Broadspire Services, a third-party administrator, for a total consideration of $150 million. Crawford said the acquisition is anticipated to more than double its revenue from self-insured clients.
The transaction, which is subject to normal closing conditions, should be completed during the fourth quarter 2006.
Based on 2005 revenue, Crawford said the combined Crawford and Broadspire Services organization would rank third in revenue from claims handled for this market segment.
Crawford & Co. intends to retain the Broadspire Services name, rebranding Crawford Integrated Services, its risk and health care management business unit.
Advisors to Platinum Equity on the transaction include Stone-Ridge Advisors LLC and Bingham McCutchen LLP. SunTrust Robinson Humphrey and King & Spalding LLP were the advisors for Crawford & Co.
OneBeacon, QBE-U.S.
Boston-based OneBeacon Insurance Group signed a binding agreement to transfer its Agribusiness book renewal rights and certain OneBeacon Agri assets to QBE the Americas, a wholly owned division of Australia’s QBE Insurance Group Ltd.
OneBeacon Agri is a division of the OneBeacon Insurance Group that provides commercial farm and ranch and commercial agri products primarily in midwestern and western states. Products are distributed through a select network of independent agents specializing in agribusiness. In 2005, gross written premiums totaled approximately $85.7 million.
OneBeacon expects the sale will close in the third quarter of this year for approximately $32 million and that it will result in a pretax gain of approximately $30 million.
OneBeacon Agri employees will become QBE employees subsequent to the sale. OneBeacon said it will continue to provide certain services to the Agri business through transition services arrangements.
ISO, Xactware
ISO acquired the assets of Xactware Inc., a provider of estimation software and services for the property insurance, remodeling and restoration industries. Terms were not disclosed.
The privately held company and its more than 230 employees will continue operating at the current headquarters in Orem, Utah, as a stand-alone entity, serving a customer base of property insurers, contractors and service providers throughout the United States and Canada.
Lockton, Alexander Forbes
Lockton Inc. and Alexander Forbes Ltd. reached a definitive agreement whereby Lockton will acquire Alexander Forbes International Risk Services, the international brokerage operation of Alexander Forbes Ltd. The $170 million transaction is noted to make Lockton the largest independent, privately owned, global insurance broker. The combined business is reported to have more than $600 million in revenues.
When combined with AFIRS’ position in the European broker partnership, EOS RISQ, the fusion of the two organizations will create an organization with local representation in 43 countries. Completion is expected by the end of October 2006 and is subject to regulatory approval.
Lockton said the purchase includes Alexander Forbes’ insurance brokerage operations in corporate risk, professional indemnity, property, construction, aviation, marine, energy and specialist business, such as political risk and contingency.
The new company — Lockton International Holdings Ltd. — will operate under the name of Lockton and remain based in London. Lockton International Holdings Ltd. will be a separate entity in the Lockton Group.
AIG, IPC
In a joint announcement, American International Group and IPC Holdings Ltd. said AIG is commencing an underwritten public offering to sell 13.397 million IPC common shares.
As of March 6, 2006, AIG owned 15.397 million shares — 24.21 percent of IPC’s capital. The shares were valued at more than $431 million. IPC is currently trading on the NASDAQ Exchange between $28 to $29, which values AIG’s holding at around $446 million.
AIG said it granted the underwriters an option to purchase up to 2 million shares to cover over-allotments. They noted upon completion of the transaction, if the underwriters exercise their over-allotment option in full, it is anticipated that AIG will not own any shares of IPC’s common stock. IPC will not receive any proceeds from the sale of the shares.
Gray-Stone & Co., Cascade General Agency/Amstar E&S
Gray-Stone & Co, Thousand Oaks, Calif., acquired the accounts of Cascade General Agency Inc./Amstar E&S in Moorpark, Calif. The Moorpark office closed.
A number of the former employees are now working at Gray-Stone’s headquarters in Thousand Oaks, Calif. Joining Gray-Stone from Cascade/Amstar are Helene Lerner, Robin McEwen, Sarah Wayne and Cascade General Agency’s former president, David Meyer. Also joining Gray-Stone at this time is Patty Arthur.
A California wholesaler, Gray-Stone began business more than 70 years ago and is licensed to transact in 49 states. In addition to six workers’ compensation markets, Gray-Stone has property, comprehensive general liability, crime, umbrella and professional liability programs.
Hawaiian Insurance & Guaranty
Hawaii Insurance Commissioner J.P. Schmidt filed an application for an Order of Liquidation of The Hawaiian Insurance & Guaranty Co. Ltd. The order sought to authorize Commissioner Schmidt as liquidator to take possession and control of HIG’s assets for the protection of policyholders, creditors and the public.
“This is the next step that we anticipated would be necessary to protect policyholders. We are continuing discussions with several parties who are interested in investing capital or purchasing HIG to put it back in a financially stable condition,” Schmidt said.
HIG’s financial condition had been adversely affected by the experience of its parent company, Vesta Fire Insurance Corp. and VFI’s affiliated insurance companies. VFI and four other VFI subsidiary insurance companies were ordered into liquidation in Texas on Aug. 1, 2006.
Schmidt is currently considering a number of options including proposals from companies that will provide additional capital to HIG.
During liquidation, claims will be serviced and paid by the Hawaii Insurance Guaranty Association, the organization established by law to handle the Hawaii claims of property and casualty insurers in liquidation. Policyholders will receive written notice about the liquidation. HIG was previously placed into rehabilitation on June 30, 2006.
HIG, an insurance company with its principal offices in Honolulu, Hawaii, sold homeowners and motor vehicle insurance policies in Hawaii and California. HIG insures approximately 24,000 dwellings in Hawaii and is the state’s fourth largest provider of homeowners insurance.
EIG Mutual Holding Co.
Reno, Nev.-based EIG Mutual Holding Co., the parent holding company of Employers Insurance Co. of Nevada has filed a plan of conversion with the Nevada Commissioner of Insurance. The plan describes the terms upon which EIG Mutual Holding proposes to convert from a mutual insurance holding company to a publicly traded stock company.
The plan must be approved first by the Nevada Commissioner of Insurance after a public hearing, and then by a vote of the members of EIG Mutual Holding.
Assuming those approvals are obtained, EIG Mutual Holding would conduct an initial public offering of the common stock of the converted holding company. The conversion will not affect the policy benefits, dividend eligibility or policy premiums of existing EICN policies. The company currently anticipates that the completion of the conversion will occur in the first quarter of 2007.
Nevada Governor Kenny Guinn spearheaded legislation in 1999 that established Employers Insurance Co. of Nevada as a mutual insurance company owned by its Nevada policyholders, from the former State Industrial Insurance System. EIG Mutual Holding Co. offers workers’ compensation insurance to small businesses in eight states through EICN and Employers Compensation Insurance Co., and care management services through Employers Occupational Health Inc.
“Our conversion to a stock company will enhance our financial and strategic flexibility and enable us to take advantage of growth opportunities and continue our expansion into new markets. Our Board of Directors examined the Plan of Conversion carefully and concluded that it is fair and equitable to the eligible members of EIG Mutual Holding Co.,” said Douglas D. Dirks, CEO.
If the conditions to the conversion are satisfied, the plan provides for the distribution to more than 6,500 eligible members of EIG Mutual Holding Co. of aggregate consideration of not less than EICN’s surplus as reported in its statutory financial statements most recently filed prior to completion of the conversion. As of June 30, 2006, EICN’s surplus was $554 million.
The aggregate value of any consideration to be distributed to eligible members will not be determined until the time of the completion of the conversion and the initial public offering. Any distribution of consideration to eligible members would be made in exchange for the extinguishment of their membership interests in EIG Mutual Holding at the time of completion of the conversion and the initial public offering. Any consideration will be in the form of the converted company’s common stock, cash or a combination of both. Only members of EIG Mutual Holding who have policies issued by EICN that were in force on Aug. 17, 2006, will be eligible to receive consideration if the plan becomes effective.
The plan and certain related documents will be available on the company’s Web site at www.eig.com and through the Nevada Division of Insurance. More detailed information about the proposed conversion will be provided to members of EIG Mutual Holding Co. in the coming months. In the meantime, members may call 888-900-1476 between the hours of 8 a.m. and 5 p.m., Pacific Time, Monday through Friday, to speak to a company representative.
Calif. State Fund Offers Credit
Extension for Heat Waves
California’s State Compensation Insurance Fund is extending credit to policyholders who have suffered a financial loss or business disruption caused by the recent severe heat wave.
“State Fund recognizes that the unprecedented heat has caused a significant disruption and hardship for some of our policyholders,” said State Fund acting president James C. Tudor. “Our offer of credit relief is one way to help them return to normal operations.”
State Fund will work with employers who were unable to report payroll figures or submit payments as a result of the heat emergency. Dedicated customer service lines have been established to provide assistance to policyholders whose operations were impacted by the extreme weather. Affected policyholders are encouraged to contact the Customer Service Center at 800-388-0902 to make arrangements for July payroll reports and payments.
The program will be offered to employers through a series of newspaper announcements and mailings to all State Fund policyholders. Separate notices will be provided at Heat Illness Prevention Seminars presented by State Fund and Cal OSHA.
For more information, visit www. scif.com.