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Arch Å˽ðÁ«´«Ã½Ó³»­ North America, part of Bermuda’s Arch Capital Group Ltd., announced it has entered into an agreement to acquire Allianz Global Corporate & Specialty’s US MidCorp and Entertainment businesses for a cash consideration of $450 million.

The transaction includes risk transfer for Allianz, as Arch is assuming approximately $2 billion of loss reserves associated with the business. The cash payment from Arch, together with an estimated $1.0 billion of Allianz capital supporting the business, is expected to result in $1.4 billion of total transaction value for Allianz Group.

The businesses subject to sale are underwritten by Fireman’s Fund Å˽ðÁ«´«Ã½Ó³»­ Co. and its subsidiaries, namely American Automobile Å˽ðÁ«´«Ã½Ó³»­ Co., Chicago Å˽ðÁ«´«Ã½Ó³»­ Co., Interstate Fire & Casualty Co., and National Surety Corp. Collectively these businesses wrote $1.7 billion of gross premium written in 2023, AGCS said in a statement. (AGCS is Allianz Group’s dedicated carrier for corporate and specialty insurance business. Allianz purchased Fireman’s Fund in 1990.)

Approximately 500 employees from Allianz, which include underwriting, claims and other professional staff, are expected to transfer to Arch as part of the agreement, the companies said.

Going forward, AGCS U.S. said it will focus on its Large Corporate and Specialty business.

“This strategic step for our U.S. business allows us to leverage our strengths in these important market segments, where we have deep expertise in addressing our clients’ most complex risks,” according to Tracy Ryan, AGCS chief executive officer for North America and member of AGCS’s Board of Management, in a media statement.

“The acquisition of the MidCorp business meaningfully expands our presence in the U.S. middle market, a targeted growth area for Arch,” commented Matt Shulman, CEO for Arch Å˽ðÁ«´«Ã½Ó³»­ North America.

“This transaction will enhance our distribution relationships, broaden our product suite and expand our ability to participate in these underwriting-intensive middle-market lines. We are also excited to add a market-leading entertainment business that complements Arch Å˽ðÁ«´«Ã½Ó³»­’s existing portfolio of specialty products,” he added.

Subject to regulatory approvals, the deal is expected to close in the second half of 2024.

Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are acting as financial advisers to Arch, and Willkie Farr & Gallagher LLP is serving as the company’s legal adviser.

Arch Å˽ðÁ«´«Ã½Ó³»­ North America, which includes Arch’s insurance operations in the United States and Canada, wrote approximately $5.8 billion of gross premium in those regions in 2023. The company offers a range of property/casualty and specialty insurance across market segments. Business in the U.S. is written by Arch Å˽ðÁ«´«Ã½Ó³»­ Co., Arch Specialty Å˽ðÁ«´«Ã½Ó³»­ Co., Arch Property & Casualty Å˽ðÁ«´«Ã½Ó³»­ Co., and Arch Indemnity Å˽ðÁ«´«Ã½Ó³»­ Co. Business in Canada is written by Arch Å˽ðÁ«´«Ã½Ó³»­ Canada Ltd.

In March 2023, Allianz announced it would restructure its global commercial insurance segment, which includes AGCS, as one go-to-market business under the trading name Allianz Commercial.

Topics Mergers & Acquisitions USA New Markets Allianz