March 10, 2004 by Canadian Underwriter
Fairfax’s Lindsey Morden Group has agreed to sell its U.S. third-party administration (TPA) businesses, which include RSKCo Services and Cunningham Lindsey Claims Management Inc. (CMI). The new owner, Broadspire Services Inc., says the two companies will be merged into its existing operations, with Broadspire management and CEO Dennis Replogle maintaining control of the company.
Under the terms of the deal, Broadspire will be paid US$22 million to service existing claims of the two companies. Broadspire is also acquiring US$4.0 million in net working capital from the U.S. TPA businesses. Lindsey Morden says it will borrow the US$22 million from its parent, Fairfax Financial.
The loss adjusting business of Cunningham Lindsey U.S., and Vale National Training Centers Inc. are not part of the deal. A Lindsey Morden press release notes that these two businesses are profitable, as are Lindsey Morden’s other global operations. Lindsey Morden has been restructuring its U.S. operations which had been dragging down overall results. “The sale of the claims administration business is expected to improve operating performance and reduce estimated future restructuring costs of the U.S. operations,” states a Lindsey Morden press release.
The deal is expected to close next week.