Alleghany Corp. Makes Multiple Acquisitions
NEW YORK 07/01/2003 (BestWire)-Alleghany Corp. said it has completed its acquisition of Atlanta-based Royal Specialty Underwriting Inc. for about $115 million, as well as another company to handle underwriting for Royal Specialty.
The acquisition of Royal Specialty--an excess-and-surplus underwriting agency subsidiary of Royal & Sun Alliance Insurance Group plc--by Alleghany Corp.'s subsidiary Alleghany Insurance Holdings LLC includes renewal rights to the ongoing business underwritten by Royal Specialty for insurance affiliates of Royal & Sun Alliance. In addition, the transaction includes the related net unearned premium reserve portfolio of about $320 million, but it excludes loss reserves associated with business previously underwritten by Royal Specialty for insurance affiliates of Royal & Sun Alliance, Alleghany (NYSE:Y) said.
To support future business to be underwritten by Royal Specialty, Alleghany has acquired Underwriters Reinsurance Co.--an insurance company admitted in 50 states--from Swiss Re America Holding Corp. and capitalized it at about $500 million.
Underwriters Re expects to acquire Landmark American Insurance Co.--a surplus-lines insurer--from Royal & Sun Alliance during the third quarter to write nonadmitted or surplus business underwritten by Royal Specialty, Alleghany said. Underwriters Re is to be renamed RSUI Indemnity Co., and the name of Royal Specialty is to be changed to RSUI Group Inc., Alleghany said.
The acquisitions are for two shell companies and an underwriting agency with associated unearned premium, Robert Hart, general counsel for Alleghany Corp., told BestWire.
"We didn't have business of this scope in terms of what they do," Hart said. "Our Capitol Transamerica is really focused on the agent market, and this new business is through wholesale distribution. It was a great opportunity to acquire a quality underwriting team and build an insurance company around it. It was a daunting task but we're pleased to be there."
Management and the approximately 280 employees of Royal & Sun Alliance Insurance Indemnity--based in Atlanta and Sherman Oaks, Calif.--will continue with the newly formed RSUI Group Inc., Alleghany said. James Dixon will continue as the chairman of RSUI, while E.G. Lassiter will continue as president and Dave Leonard will continue as executive vice president, according to Alleghany.
Pending satisfaction of regulatory rate and form filings by Underwriters Re and the acquisition of Landmark, RSUI will underwrite on policies issued by insurance affiliates of Royal & Sun Alliance and fully reinsured by Underwriters Re, Alleghany said.
A.M. Best Co. has assigned financial strength ratings of A (Excellent) to Underwriters Reinsurance Co., A- (Excellent) to Royal & Sun Alliance, and A+ (Superior) to Alleghany Insurance Co.
As of late afternoon July 1, Alleghany's stock was trading at $200.20 a share, up 4.82% from the previous close.
(By John Hillman, associate editor, BestWeek: John.Hillman@ambest.com)