The transaction is expected to close in the first half of 2017, pending regulatory approvals and customary closing conditions, Liberty Mutual said in a press release. Upon closing, Liberty Mutual will acquire a 100% ownership interest in Ironshore. The purchase price will equate to 1.45x Ironshore’s actual tangible book value as of year-end 2016, and is estimated to be approximately US$3 billion, the release said, adding that the purchase price is subject to closing price adjustments.
Once the transaction is closed, Ironshore will continue to operate with the same management team and brand, but as part of the larger Liberty Mutual organization, which has a focus on growing its specialty lines operations.
“We are pleased to have Ironshore and its proven management team led by CEO Kevin H. Kelley join Liberty Mutual,” said David H. Long, Liberty Mutual Insurance chairman and CEO, in the release. “Ironshore has a track record of profitably underwriting global and diverse specialty risks insurance and is an ideal complement to Liberty Mutual, providing additional scale, expertise, innovation and market relationships to our US$5 billion Global Specialty business.”
Ironshore, which was founded in 2006, had gross premiums written of US$2.2 billion in 2015 and is one of the ten largest Excess & Surplus lines insurers in the United States. The company, which has approximately 800 employees located in 15 countries worldwide, is organized into three operating hubs based in the U.S., Bermuda and London.
“The combination of Ironshore and Liberty Mutual is a win-win proposition and value creating for both companies,” said Kelley in the release. “Ironshore will become part of another ‘A’ rated company with a global reach, a strong balance sheet, wide client base and a much greater capacity to drive profitable growth.”
In a separate statement from Ironshore, Kelley said that the announcement “is beneficial for all three parties involved and is the culmination of a careful and considered process. We have aimed for the best possible outcome for our employees, clients and business partners and are confident this transaction achieves these goals and more.”
Barclays Capital Inc. acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP provided legal advice to Liberty Mutual Insurance in the transaction.
Liberty Mutual Insurance is a diversified insurer with operations in 29 countries and economies around the world, including Canada. It offers a wide range of insurance products and services, including personal automobile, homeowners, accident & health, commercial automobile, general liability, property, surety, workers compensation, group disability, group life, specialty lines, reinsurance, individual life and annuity products. As of Dec. 31, 2015, Liberty Mutual had US$121.7 billion in consolidated assets, US$102.5 billion in consolidated liabilities and US$37.6 billion in annual consolidated revenue.
Ironshore was founded in December 2006 with over US$1 billion in private equity capital to capitalize on opportunities in the specialty property and casualty insurance industry, Ironshore said in the statement. In February 2015, Fosun International Limited and its subsidiaries acquired an initial 20% ownership interest in Ironshore. In November 2015, Fosun acquired the remaining 80% ownership interest in Ironshore.
Ironshore provides broker-sourced specialty property and casualty insurance coverages for varying risks located throughout the world. Select specialty coverages are underwritten at Lloyd’s through Ironshore’s Pembroke Syndicate 4000.
Fosun International was founded in 1992 in Shanghai and listed on the main board of the Hong Kong Stock Exchange on July 16, 2007, the company said on its website. Fosun’s businesses include two major segments: integrated finance (wealth), which includes insurance, investment, wealth management and Internet finance); and industrial operations, (including health, seteel, property development and sales and resources).