Liberty Mutual, Ohio Casualty
Boston-based Liberty Mutual Group has agreed to buy Ohio Casualty Corp. of Fairfield, Ohio, in a transaction valued at approximately $2.7 billion. Liberty Mutual will acquire all outstanding shares of common stock of Ohio Casualty for $44.00 per share in cash.
Ohio Casualty Corp, is the holding company of The Ohio Casualty Insurance Co. and five other property and casualty insurance companies, which are referred to under the marketing brand Ohio Casualty Group. Ohio Casualty Group sells personal, commercial and bond insurance products through independent agents and brokers.
Liberty Mutual said it intends to fund the purchase with cash on hand and short-term debt; the transaction is not subject to any financing contingencies.
The proposed transaction, which has been approved by the boards of directors of both companies, is subject to approval by shareholders and regulatory approvals It is expected to close in the third quarter of 2007.
Following the acquisition, Ohio Casualty will be part of Liberty Mutual Group’s Agency Markets business unit. The 11 companies in Liberty Mutual Agency Markets have more than 6,800 employees and approximately 6,500 appointed agencies. In 2006, Liberty Mutual Agency Markets’ net written premium was $5.9 billion.
Ohio Casualty, which has approximately 2,100 employees and operations in 48 states, has approximately 3,400 appointed agencies.
Ohio Casualty Group is the marketing brand for six companies: The Ohio Casualty Insurance Co., West American Insurance Co., American Fire and Casualty Co., Ohio Security Insurance Co., Avomark Insurance Co. or Ohio Casualty of New Jersey Inc.
Rated “A” (Excellent) for financial strength by the A.M. Best Co. Inc., the group has written premiums of approximately $1.42 billion as of Dec. 31, 2006.
According to Edmund F. Kelly, Liberty Mutual Group chairman and CEO, through the addition of Ohio Casualty, the firm’s independent agency business will boast combined net written premium exceeding $7.3 billion and become the largest regional provider of property and casualty products distributed through independent agents in the U.S.
Financial services outsourcing firm and insurance wholesaler BISYS has agreed to be acquired by global financial giant Citi. Under the deal, Citi would acquire all of the outstanding shares of BISYS in a transaction valued at approximately $1.47 billion.
At closing, Citi said it will sell the Retirement and Insurance Services Divisions of Bisys to affiliates of J.C. Flowers & Co. LLC, which owns Crump, making the net cost of the transaction to Citi approximately $800 million. The Insurance Services Group provides independent wholesale distribution of life insurance and commercial property/casualty insurance, among other activities.
Citi would combine BISYS Fund Services and Alternative Investment Services, which provide administration and distribution services for mutual funds, hedge funds, private equity funds, and other investment products, with its own investment industry operations.
JC Flowers will be combining BISYS Commercial Insurance Service with Crump. In addition, JC Flowers said its acquisition of BISYS’ life insurance and retirement services business has the potential for creating a leading integrated provider of wholesale insurance brokerage and retirement services.
Under the terms of the transaction, BISYS shareholders would receive $12.00 in cash per share, consisting of $11.85 per share to be paid by Citi at the closing of the acquisition and a special dividend of $0.15 per share in cash payable by BISYS, and conditioned upon the closing of the acquisition, for total consideration of $1.47 billion.
The boards of directors of Citibank and BISYS as well as a special committee of independent directors of the BISYS board have each unanimously approved the transaction, according to the parties. The transaction is expected to close in the second half of this year. It is subject to BISYS shareholder approval and to regulatory approvals in the U.S, Ireland and Bermuda.
The BISYS Group Inc. provides outsourcing services for the investment and insurance industries. Its Investment Services group provides administration and distribution services for mutual funds, hedge funds, private equity funds, retirement plans, separately managed accounts, and other investment products. Through its Insurance Services group, BISYS is a national distributor of commercial property/casualty insurance, long-term care, disability, and annuity products.
The BISYS Group, Inc. was founded in 1989 through acquisition from ADP and had its initial public offering in 1992. It has grown through numerous acquisitions including in 2001, Insurance Exchange of America, Inc. (IXA), the Toner Organization and Life Brokerage Corp.; in 2002, Harrison James Group LLC and Career Brokerage (aka Feingold Scott, Limited); in 2003, commercial insurance brokers Tri-City Brokerage and USA Insurance group; in 2006, Ratner Associates and D&O Concepts, a specialist in professional legal liability and JCH Insurance Brokers, which focuses on environmental risk management; and in 2007, Truckwriters, Inc., a Zurich program for trucking and transportation risks nationwide.
United Heritage, Alliance Mutual Insurance
Alliance Mutual Insurance Co., headquartered in Greensboro, N.C., and United Heritage Financial Group Inc., based in Meridian, Idaho, have reached a preliminary agreement under which United Heritage will acquire Alliance.
Alliance, founded in 1976, is a provider of property and casualty insurance throughout North Carolina through a network of independent agents.
United Heritage is a financial holding company that owns the stock of three insurance companies: United Heritage Life Insurance Co., United Heritage Property & Casualty Co., and Sublimity Insurance Co.
The transaction, which will include Alliance’s conversion from a mutual association to a stock company, is subject to regulatory approval and the approval of Alliance’s members. Financial terms of the transaction were not disclosed.
A group of industry experts announced the launching of Claimetrics, a claims management company focused on measurable results, at the Risk and Insurance Management Society in New Orleans.
The founders maintain the launch “marks the beginning of a new age of reform and change in the industry” because the firm measures claims success in a new way.
“We are a disruptive force in the industry,” said Barry Bloom, president and chief operating officer of Claimetrics, and a proponent of using metrics in analyzing claims data.
“For decades, the focus has been on the process of managing a claim. That’s not our standard. Our goal is the result, to efficiently resolve a claim, to positively impact the health and productivity of the workforce, and to lower total costs to the employer. Those are measurable, provable results. And we’ll prove them to our clients every day.”
Marshall Snipes, CEO, said the leadership team of Claimetrics has been brought together by a “common belief that the old ways of doing business needed reform” in a changing business environment.”
Bloom has 28 years of experience. As a senior executive at Sedgwick CMS Inc., and the national practice leader for claim consulting, at AON, Bloom has specialized in workers’ compensation, liability and non-occupational disability claims administration and integrated clinical managed care.
Alleghany, Employers Direct
Alleghany Corp. has agreed to purchase all outstanding shares of California workers’ compensation writer Employers Direct Corp. for $195 million in cash.
EDC, which was founded in 2002, is an insurance holding company based in Agoura Hills, Calif. Through its wholly-owned subsidiary Employers Direct Insurance Co., it writes workers’ compensation on a direct basis in California.
EDC markets only in California where it reports insuring 740 of businesses with more than 130,000 employees. Its customers are California-based, mid-sized, private businesses. Its average policyholder pays annual premiums of about $240,000, according to the company.
At the end of 2005, EDC reported having more than $150 million in written workers’ compensation premiums.
Alleghany Corp., with $6.2 billion in assets and $2.5 billion in stockholders’ equity, is engaged in the property/ casualty insurance business through its subsidiary Alleghany Insurance Holdings LLC, which consists of RSUI Group, Capitol Transamerica Corp. and Darwin Professional Underwriters Inc.
The approximately 175 employees of EDC are expected to remain with the company, as are its co-founders, Chairman, President and CEO James E. Little, and Vice Chairman, Executive Vice President and CFO Ronald A. Groden.
The transaction is between Alleghany Corp. and EDC shareholders, primarily Golden Gate Capital and a private equity fund managed by Swiss Re.
Upon closing, which is estimated to occur in the third quarter of 2007, Employers Direct will become an indirect wholly-owned subsidiary of Alleghany.
GMAC Insurance, Provident (UK)
GMAC Insurance, the insurance business of GMAC Financial Services, has agreed to acquire Provident Insurance, the United Kingdom-based auto insurance division of Provident Financial PLC.
The acquisition will complement GMAC’s existing U.K. insurance operations and support European growth initiatives.
The purchase price is approximately £170 million ($340 million USD) in cash and is expected to close in the second quarter, pending regulatory approvals.
Ron Judd, senior vice president of GMAC Insurance’s international operations, said the addition of Provident Insurance would provide entry into the U.K. automotive insurance market with the potential to also expand throughout Europe.
Provident Insurance specializes in non-comprehensive coverage, second cars and female drivers. Provident Insurance distributes its products through a network of brokers and through its own growing Internet-based intermediary, www.yesinsurance.co.uk.
GMAC Insurance is the insurance arm of GMAC Financial Services with a focus on automotive insurance products such as physical damage and liability coverage, extended warranty, GAP insurance and wholesale floorplan insurance (automobile dealer inventory).
The international operations of GMAC Insurance operate outside the U.S. and Canada, and include Car Care Plan (a U.K.-based extended warranty insurer), ABA Seguros (a Mexico-based motor insurer), GMAC Life ForsÃƒƒƒ€kring (a Swedish-based credit life company) and an international reinsurance business based in Bermuda.
Direct Response, J.C. Flowers & Co.
Direct Response Corp., the holding company for the Response Insurance Group, has signed an agreement under which an affiliate of J.C. Flowers & Co. LLC will become the largest investor in DRC. The transaction is subject to regulatory approval.
The Response Insurance Group is a national direct-to-the-consumer auto insurer headquartered in Meriden, Conn. The company was formed in 1995 and currently has customers in 42 states and Washington D.C.
Under terms of the agreement, Metalmark Capital LLC, on behalf of Morgan Stanley Capital Partners, III LP, and other related investors, will sell just under half of its shares to JCF. Morgan Stanley Capital Partners III and its related investors will retain a sizable portion of their shares. Specific terms of the transaction have not been disclosed.
The new DRC board will include Jeffrey C. Keil, president of Stoneridge Holding, as chairman, and James M. Stone, president of Plymouth Rock, as vice chairman. Stone was a founder of the company and has served generally on the board since its inception.