Farmers, Zurich Small Business
Truck Insurance Exchange, a unit of Farmers Insurance Group, reports it will purchase the rights to access renewals on Zurich North America Commercial’s Small Business Solutions (SBS) $800 million book of business.
In addition, the management of the SBS book of business will transfer to Farmers Group, Inc.
Farmers Group, Inc. is a wholly owned subsidiary of Zurich Financial Services. Property and casualty products are underwritten and issued by the Farmers Exchanges and their subsidiaries, which Farmers Group, Inc. manages but does not own.
Farmers Small Business Insurance unit, which writes through the Exchange, is licensed to operate in 41 states — a “core” 29 serviced by Farmers exclusive agents and an additional 12 states (mainly in the East) serviced by independent agents. In 2007, Farmers Small Business Insurance unit produced $1.6 billion in gross written premium.
The SBS book consists of three primary lines of business: business owner’s policy for property, general liability and umbrella, first-and-third-party auto and workers’ compensation — and is sold in 49 states plus the District of Columbia.
The first exercise of rights to access renewals on this book is estimated to occur within 18-to-24 months after the transaction closes, although timing will vary by state and product/line of business.
Berkshire Hathaway, White Mountains
Warren Buffett’s Berkshire Hathaway Inc. will sell its 16.3 percent stake in White Mountains Insurance Group Ltd. in a transaction valued at $836 million, seven years after investing in the Bermuda-based insurer, White Mountains said.
Berkshire will exchange its 1.724 million shares for about $751 million of cash plus a unit that holds two businesses, Commercial Casualty Insurance Co. and International American Group Inc., with $435 million of assets and $58 million of adjusted shareholder equity, White Mountains said. The transaction is valued at $485 per share, it said.
Ray Barrette, White Mountains chief executive, said the agreement lets the Hamilton-based company exit businesses with potentially volatile reserves, use capital more efficiently and redeem stock at a small premium to book value. White Mountains would have about 8.8 million shares after the transaction.
Berkshire, an insurance and investment company, invested $300 million in White Mountains in 2001, when the latter paid about $2.2 billion for the U.S. property and casualty operations of Britain’s CGNU Group.
Buffett had been a long-time friend of Jack Byrne, who was White Mountains’ chief executive at the time. Byrne is credited with improving the fortunes of auto insurer Geico Corp in the 1970s, with Buffett as an investor. Berkshire now owns Geico.
Barrette said “all shareholders benefited handsomely from the relationship” with Omaha, Nebraska-based Berkshire. “White Mountains is now a larger, more diversified business, competing actively in many areas with Berkshire Hathaway. This is a graceful, value-enhancing way to go our separate ways.”
White Mountains said the transaction is structured so that neither it nor Berkshire realizes a taxable gain from the exchange. It said the transaction requires regulatory approvals and a ruling from the U.S. Internal Revenue Service.
Copyright Reuters 2008.
The Hanover Insurance Group, Inc. said it will divest its non-insurance, premium finance subsidiary, AMGRO, Inc. and its subsidiaries, to Premium Financing Specialists, Inc. of Kansas City, Missouri. The transaction is expected to close in June. Premium Financing Specialists is an independent premium finance provider. AMGRO represents about $6 million of The Hanover’s $2.3 billion in shareholders’ equity.
Global Risk, Clarendon National
Raleigh, N.C.-based Global Risk Holdings acquired Maitland, Fla.-based North American Risk Services from Clarendon National Insurance Co. Walt Sliva, President of GRH, will become chairman and chief executive officer of NARS. Robert Ruryk will become the vice president of GRH and will serve as president and chief operating officer of NARS.