This is proving to be a turbulent year for the excess and surplus lines marketplace. Price pressures, low asset yields and diminishing favorable loss reserve developments have weakened profitability. There has also been some churn in the industry, with mergers and acquisitions shaking things up in the marketplace. A few important changes:
The Hartford Acquires Maxum Specialty Group
The Hartford has agreed to buy Northern Homelands Co, the holding company for Maxum Specialty Insurance Group. The New England based company says that this acquisition will significantly expand their excess and surplus lines. Between Maxum Indemnity and Maxum Casualty, they are authorized for excess and surplus in all 50 states, Puerto Rice, the District of Columbia and the Virgin Islands. Hartford paid $170 million for the company.
Zurich American Insurance Co. Acquires RCIS
Zurich American Insurance Co. announced that they have completed their acquisition of Rural Community Insurance Agency (RCIA) and Rural Community Insurance Company (RCIC) from Wells Fargo Insurance for the sum of $700 million. The two companies, known together as Rural Community Insurance Services (RCIS), will continue to offer federal crop insurance programs as well as private crop insurance products.
American Financial Offers to Buy the Rest of Insurer National Interstate
American Financial Group (AFG) has offered to buy the remaining outstanding common shares of National Interstate Group. Representatives of AFG said that they expect that the National Interstate board of directors will appoint a special independent committee to consider the proposal and make their recommendations. They say that they will not go forward with the purchase unless it is approved by the special committee. The company made an offer for the National Interstate shares two years ago, but withdrew the offer when many stockholders objected to the move.
With the shake-ups in excess and surplus, as well as other areas of insurance, there are likely to be some unexpected developments this year. Stakeholders should watch developments and adjust as necessary in this changing market.