Business Moves

Merchants Group Inc. in Buffalo, N.Y., which sells property casualty insurance through Merchants Insurance Co. of New Hampshire, agreed to be bought by American European Group Inc., a private insurance holding company.

The cash acquisition price is valued at $33 a share or $70.8 million. The sale is subject to both shareholder and regulator approval and is expected to close sometime in the first quarter of 2007.

The buyer, AEG, also owns Rutgers Casualty out of New Jersey. Another of its subsidiaries, Kentucky National Insurance Co., is in runoff.

Neither Merchants Group nor Merchants NH, with approximately $50 million worth of property casualty business, has any assets or employees. The business operations have been managed by Merchants Mutual for years and will continue to be for the foreseeable future.

Merchants NH, a stock-based company domiciled in New Hampshire, reported net income of $3.8 million and shareholders equity of $77 million as of June 30, 2006.

Merchants Mutual Insurance Co., which writes about $150 million in business and owns 12 percent of Merchants Group, is not affected by the sale and agents writing for it should see no change. The sale will also not impact Merchants Mutual’s 200 employees in Buffalo.

Generally, Merchants Mutual handles standard business while Merchants NH is a preferred account vehicle. Merchants Mutual and Merchants NH – which together form Merchants Insurance Group – sell property and casualty insurance in the northeastern, mid-Atlantic, and midwestern states. Approximately 670 independent insurance agents represent the companies.

Sinclair Group, Arthur Noll Agency

Sinclair Insurance Group of Wallingford, Conn., acquired Arthur Noll Agency of Bloomfield for an undisclosed amount. According to Dave Sinclair, president, Noll generates about $3 million in annual revenues from construction and transportation accounts.

Principals Arthur Noll, Jeffrey Noll, Martin Shea and Lee Noll Farber will join Sinclair in a new office in Manchester, Conn., to operate under the name Sinclair Risk and Financial Services LLP.

Sinclair Insurance Group also has offices in Norwalk and Chester. The agency specializes in risk management, insurance and benefits for construction and manufacturing risks.

In May 2005 Sinclair Insurance Group acquired J. Biron Agency of Newington, Conn., a surety bond specialist. That addition came on the heels of the acquisition of The Robinson Co., a Waterbury-based employee benefits firm. Its other divisions include JM Layton and Sinclair Marine. Independently owned Sinclair Insurance Group is an Insurance Journal Top 100 agency with more than $200 million in annual premiums.

Hiscox, Bermuda Holding Company

London’s Hiscox plc reported that it has established a new Bermudan domiciled holding company for the Group, Hiscox Ltd. Hiscox said its strategy is to build on the foundations of internationally traded insurance and reinsurance business, balanced by local retail insurance business.

In 2005, Hiscox decided it needed to have operations on the ground in the U.S. where the non-life markets are the largest in the world, and in Bermuda, which has become a major reinsurance centers. It formed Hiscox Bermuda as a reinsurer and also established Hiscox USA in New York. U.S. business accounted for 36.3 percent of the group’s gross earned premiums in 2005. With the formation of Hiscox Bermuda and Hiscox USA, the amount of U.S. and Bermudan originated business is expected to increase significantly.

National Merit Insurance

Washington’s Office of the Insurance Commissioner postponed a public hearing to consider a request to merge Response Indemnity Co. of Delaware, with National Merit Insurance Co. of Bellevue, Wash. Both companies sell property and casualty coverage and are wholly owned subsidiaries of Response Insurance Co., which in turn is wholly owned by Direct Response Corp., a Delaware holding company. The proposed merger would simplify the corporate structure and provide for more efficient regulation, according to the request. National Merit would be surviving entity.