Allied World to acquire RSA’s Hong Kong and Singapore operations

Allied World Assurance Company, Ltd. has reached definitive agreements to acquire the Hong Kong and Singapore operations of Royal & Sun Alliance Insurance plc (RSA) for approximately US$215 million, Allied World Assurance Company Holdings, AG announced Thursday.

The Hong Kong and Singapore businesses – which had total gross premiums written of about US$250 million in 2013 – include a niche group of specialty lines. These include casualty, construction and engineering, marine and property, notes a statement from Allied World Assurance Company Holdings, AG, which through its subsidiaries and brand known as Allied World, is a global provider of property, casualty and specialty insurance and reinsurance solutions.

Under the terms of the transaction – subject to regulatory approvals in Singapore and Hong Kong, as well as court approval in Singapore – Allied World will acquire the in-force portfolio and related assets and liabilities of both branches, the statement notes. Allied World’s current operations in Hong Kong and Singapore include an established commercial insurance business.

Subject to adjustments, on completion, Allied World will fund the purchase price of US$215 million with cash on hand. In addition to the purchase price, the company reports that it expects an additional US$90 million will likely be required to appropriately capitalize the business on an ongoing basis.

The transaction is expected to be completed during the first half of 2015 and to be accretive to Allied World’s earnings immediately.

Allied World reports the transaction complements its global specialist insurance strategy by providing meaningful additional scale in the region. “The business brings regional market leadership, complementary product offerings, extensive distribution and an experienced and talented management team to Allied World, strengthening our global insurance franchise,” Scott Carmilani, president and CEO of Allied World Assurance Company, says in the statement.

In May, Allied World Assurance Company launched its initial property and excess casualty offerings for Canada. And earlier this month, the company announced it had launched a property line for energy risks in the Canadian market.

With regard to RSA in Canada, Arthur J. Gallagher & Co. recently completed a transaction to acquire an 87% equity interest in Noraxis Capital Corporation, a subsidiary of Roins Financial Services Limited, which also owns the RSA Canada group of companies. The remaining 13% will continue to be owned by various management employees of Noraxis. 

In May, Arthur J. Gallagher signed a $422-million agreement to acquire Noraxis, an independently operated network of insurance brokers in Canada that provides retail commercial, personal and employee benefits insurance products and services. RSA Canada noted in a statement at the time that after minorities, and including estimated excess working capital, RSA is expected to receive cash consideration of $441 million as a result of the sale.

“Noraxis was strategically important, but not a core part of our business and our focus remains steadfast in executing our Canadian strategy and providing our customers and brokers with the best service and propositions as possible,” said Rowan Saunders, CEO of RSA Canada.

Arthur J. Gallagher announced in July that its acquisition of Noraxis Capital Corporation had been completed.