August 22, 2018 by David Gambrill
The Hartford has signed an agreement to acquire specialty insurer The Navigators Group Inc. for US$2.1 billion in cash.
The transaction has been approved by the boards of directors of both companies and is subject to approval by Navigators’ shareholders and other customary closing conditions, including regulatory approvals. It is expected to close in the first half of 2019.
Based in the United States, The Hartford has a Canadian office in the Greater Toronto Area. Hartford Fire Insurance Company wrote just under $18 million in premiums in Canada in 2017.
The Navigators Group Inc. is an international insurance company focused on global marine, construction and energy insurance. The Navigator’s property and casualty (P&C) insurance business primarily offers general liability coverage, and umbrella and excess liability coverage to commercial enterprises through its U.S. insurance and international insurance segments. No Canadian company is listed among Navigator’s list of international subsidiary companies.
“We are excited to announce the acquisition of Navigators, which we are confident will achieve key strategic and financial objectives for The Hartford,” said The Hartford’s chairman and CEO Christopher Swift. “It expands our product offerings and geographic reach, and adds tenured and proven underwriting and industry talent while strengthening our value proposition to agents and customers. We are optimistic about our combined growth opportunities and expect the acquisition to generate attractive returns.”
Founded in 1974, Navigators has an established presence at Lloyd’s, as well as underwriting operations in Europe, Asia and Latin America. The company currently operates three business segments: U.S. insurance (58 per cent of 2017 gross written premiums), international insurance (29 per cent) and global reinsurance (13 per cent).
“We look forward to bringing Navigators’ specialty lines capabilities to The Hartford,” said Stanley A. Galanski, Navigators president and CEO. “By joining The Hartford and leveraging the strength of its balance sheet and quality of its core commercial insurance products, we will create exciting opportunities to deliver enhanced value to our brokers and policyholders.”
For 2020, The Hartford expects the acquisition to be accretive to net income by $30 million to $75 million and to core earnings by $60 million to $95 million. This is comprised of a contribution by Navigators of $80 million to $125 million to net income and $110 million to $145 million to core earnings. This would be offset by a reduction of approximately $50 million in The Hartford’s net investment income, after tax, due to the cash used to fund the acquisition.