Completing a deal originally announced in October 2014, Dublin-based Global Indemnity plc has acquired American Reliable Insurance Company from Atlanta-based Assurant in a deal valued at $394 million.
ARIC tallied approximately $250 million of GAAP net earned premiums in 2013 across its specialty personal and agricultural P&C lines, which it markets through general and independent agents. Over the nine months of the company’s fiscal year in calendar 2014, it had net income of $6 million on $187 million of revenue.
Under the terms of the deal, Global Indemnity Group Inc., a U.S. holding company for Global Indemnity plc’s Global Indemnity Re subsidiary, paid $114 million in cash for 100 percent of ARIC’s stock and assumed approximately $280 million in liabilities and obligations, and mandates.
According to its January 1, 2015 8-K filing with the Securities and Exchange Commission, Assurant will record a $20 million net loss on the transaction. On the upside, Assurant will gain much-needed cash to invest in its core business. The sale will also allow its Assurant Specialty Property division to focus more exclusively on what the company sees as primary opportunities in lender-placed insurance and multi-family housing.
For its part, Global Indemnity gains a larger market footprint in the U.S. with non-overlapping underwriting and distribution channels.
“The combined company brings great value to its employees and wholesale and MGA partners, with its complementary products, infrastructure, and underwriting expertise,” said Global Indemnity plc’s CEO Cindy Valko, who also sits on the company’s board of directors. “This is an exciting milestone for Global Indemnity as we continue our commitment to profitable growth.”
In a comment on the acquisition issued shortly following the October announcement, A.M. Best opined that the acquisition would not adversely impact Global Indemnity Re’s A rating for financial strength.
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