The top M&A story of 2020 was more a global than national story but it captured more readers in every geographic location than any other. Since it was first announced in March, the proposed Aon-Willis merger remained the leading merger and non-merger insurance story for the entire year. But there were also other proposed and completed transactions that caught the eyes of Insurance Journal’s national audience. Here are the M&A reports that were of most interest to readers of National news in 2020:
Global insurance brokers Aon and Willis Towers Watson in March announced they had agreed to merge in an all-stock transaction with an implied combined equity value of approximately $80 billion. Upon completion of the combination, existing Aon shareholders will own approximately 63% and existing Willis Towers Watson shareholders will own approximately 37% of the combined company on a fully diluted basis. According to S&P, Aon intends to combine with Willis in an all-stock transaction valued at about $30 billion, with Willis shares being exchanged to Aon shares. The combined company will be named Aon. Combined the companies have more than $20 billion in revenue. Aon reported $11 billion in revenue with $2.2 billion net income for 2019 compared to $9 billion revenue and $1.4 billion net income for Willis Towers Watson. Aon will maintain operating headquarters in London, United Kingdom. The parent company will be incorporated in Ireland. The combined firm will have 95,000 employees globally, with what the announcement said will be a “significant presence” in Chicago, New York and Singapore. John Haley will take on the role of executive chairman with a focus on growth and innovation strategy. The combined firm will be led by Greg Case and Aon Chief Financial Officer Christa Davies. The board of directors will comprise proportional members from Aon and Willis Towers Watson’s current directors. In December Aon confirmed that the European Commission has initiated a review of the proposed merger. Aon said the review is a common next step “for a transaction of this size and complexity” and said it remains on track to close the deal in the first half of 2021.
U.S. insurer Allstate Corp. plans to buy National General Holdings Corp. for about $4 billion in cash, scaling up its auto insurance business at a time when the coronavirus has crushed traffic on roads and reduced claims. The deal announced in July implies a total deal value of $3.92 billion and a premium of, Reuters calculations showed. New York-based National General provides personal and commercial automobile, homeowners, umbrella, recreational vehicle, motorcycle, lender-placed, supplemental health and other niche insurance products. Auto insurance represents approximately 60% of premium with a significant presence in the non-standard auto market. “Acquiring National General accelerates Illinois-headquartered Allstate’s strategy to increase market share in personal property-liability and significantly expands our independent agent distribution,” Allstate Chief Executive Officer Tom Wilson said. National General has approximately 42,300 independent agents. Allstate will become a top 5 personal lines carrier in the independent agent distribution channel by combining Encompass and Allstate’s Independent Agent businesses with National General.
State Farm Mutual Automobile Insurance Co. is acquiring Dallas-based nonstandard auto insurer, GAINSCO, in a $400 million cash transaction reported in September. It will be the first time in State Farm’s 98-year history that it has acquired an insurance company. GAINSCO specializes in minimum-limits personal auto coverage and actively distributes its nonstandard personal auto products through independent retail agents in Arizona, Florida, Georgia, New Mexico, Oklahoma, South Carolina, Tennessee, Texas, Utah, Virginia, Ohio and Alabama. Its insurance operations are conducted through its subsidiary, MGA Insurance Company Inc., a Texas corporation.
Tokio Marine Holdings announced in February that it had completed the acquisition of New York-based Privilege Underwriters Inc. and its subsidiaries, known as Pure Group, which specializes in the U.S. high net worth insurance market. The acquisition price was $3.1 billion (approximately JPY 325.5B). The deal was completed through Tokio Marine’s wholly owned subsidiary HCC Insurance Holdings, Inc. Tokio Marine acquired 100% of Privilege Underwriters Inc.’s shares from existing shareholders that include Stone Point (51%), KKR (34%), AXA XL (10%), Pure management and others (5%).For 2018, Pure reported fee income of $229 million, a before-tax profit of $73 million and $963 million premiums under management. Its business profile is composed of homeowners (57%), auto (23%), inland marine (9%), and other lines for high-net worth clients.
Zurich Insurance and Farmers Exchanges in December agreed to buy MetLife’s U.S. property and casualty business for $3.94 billion, the insurers said, in an environment where the COVID-19 pandemic has made motor and home insurers more profitable. The Swiss insurer will contribute $2.43 billion to the deal through its Farmers Group Inc (FGI) unit, while the Farmers Exchanges will contribute $1.51 billion. The deal will give Farmers Exchanges, to which FGI provides administrative and management services, a nationwide presence in the U.S. and access to new distribution channels.
In February, healthcare liability insurer ProAssurance Corp. agreed to acquire medical professional liability insurer NORCAL Mutual Insurance Co. following NORCAL’s demutualization in a $450 million transaction. The combination is expected to create the nation’s third largest specialty writer of liability insurance for healthcare professionals and facilities. Pennsylvania-based NORCAL writes in 39 states. It reported $342 million in direct written premium in 2018 and $50 million net income. The company’s underwriting performance and overall profitability have “deteriorated sharply recently driven by significant adverse reserve development,” according to Fitch Ratings, which placed its “A” ratings for ProAssurance on negative watch following the deal announcement. Headquartered in Birmingham, Alabama, ProAssurance serves more than 54,000 healthcare providers in 49 states. The company had annualized medical professional liability gross written premium of approximately $475 million.
Specialty insurance brokerages Ryan Specialty Group and All Risks in September closed on the merger the two firms into Ryan Specialty Group. The deal unites Chicago-based Ryan Specialty Group and its nearly $12 billion in premium, and All Risks, headquartered in Delray Beach, Florida, which has close to $2.6 billion in premium. The combination will have roughly 3,300 employees and more than 70 offices across the United States, the United Kingdom and Europe. Only AmWINS and CRC Insurance Services are larger than RSG and All Risks in the wholesale brokerage space.
In December, The Travelers Companies agreed to acquire InsuraMatch, a national digital independent insurance agency, from the Plymouth Rock Group of Companies. Encharter Insurance, Plymouth Rock’s Massachusetts-based brokerage, will not be included in the transaction. Founded in 2014 as part of Boston-based insurer Plymouth Rock, InsuraMatch has operated as an autonomous business unit. In 2019, InsuraMatch produced nearly $32 million in premiums. Travelers said InsuraMatch will continue to operate independently and will manage all of its own carrier partnerships.
Fairfax Financial Holdings and its subsidiary Allied World Assurance Co. in November agreed in November to sell their majority interests in Florida-based high-net worth insurer Vault E&S Insurance Co. to private equity investor Cornell Capital and asset manager Hudson Structured Capital Management. Fairfax, through Allied World, will continue to own a 10% stake in Vault following the all-cash sale. Founded in 2017, Vault is a combination of a policyholder-owned reciprocal insurance exchange and a surplus lines company serving the high-net worth market. Since initially writing business in Florida, Vault has expanded into several states including South Carolina, New Jersey, Connecticut and Pennsylvania.
In September, California-based Hippo, an insurtech managing general agent focused on home insurance, completed its acquisition of Spinnaker Insurance Co., with an expansion into additional states next on its plate. The deal follows a multi-year partnership between the companies. Spinnaker is a New Jersey-based national property/casualty insurer, with a license to do business in all 50 states. Hippo noted that Spinnaker has been its largest carrier platform partner since 2017. With Spinnaker and its other carrier partners, Hippo provides home insurance in more than 31 states.
Insurance broker Brown & Brown has acquired CoverHound, a digital property/casualty insurance marketplace, and CyberPolicy, CoverHound’s small business subsidiary. California-based CoverHound launched in early 2010 and raised more than $112 million in venture capital over the last decade, including a $58 million funding round in 2019 with lead investor Hiscox and other investors including Chubb, Aflac Ventures, and MS&AD in Japan. In 2015, Chubb (then ACE) took a 24% stake in CoverHound. However, with this deal, Brown & Brown will assume 100% ownership.
Amynta Group, a provider of property/casualty and warranty protection products and services, has acquired the surety operations of Aspen Insurance. The business will now operate as Amynta Surety Solutions. As part of the transaction, Amynta said it will partner with Crum & Forster to provide the underwriting capacity for the business and assume Aspen’s in-force surety portfolio. Amynta Surety Solutions will be the exclusive writer of large commercial surety bonds for Crum & Forster, according to the announcement. Amynta Surety Solutions will be headquartered in Glastonbury, Conn., and will continue under the leadership of Michael Toppi, chief executive officer of Amynta Surety Solutions.
Paragon Insurance Holdings, a national managing general agency, said in May that it had closed on its purchase of Trident Public Risk Solutions from Bermuda-based Argo Group. Trident provides insurance and risk management for public sector entities such as counties, municipalities, schools, special districts and governmental inter-local pools. It operates through a distribution network of national brokerages and local agencies. It has offices in San Antonio, Texas and Springfield, Massachusetts. Paragon is headquartered in Avon, Connecticut, and writes more than 20 insurance programs including ones for arborists, ski facilities, pest control, timber, precision manufacturing and wineries. Paragon said the transaction positions it as one of the largest providers of commercial insurance coverage for public entities in the U.S.
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