Near North In Acquisition Talks

By Mark E. Ruquet

NU Online News Service, Feb. 7, 4:11 p.m.EST?North National Group, whose owner faces embezzlementaccusations, is in talks to allow its insurance brokerage servicesto be acquired by Frontenac Company, LLC.

In statements released by the two Chicago ? based companies theysaid the discussions are for the acquisition of Near North'sinsurance brokerage business, which the Near North called part ofits strategy at forming a "strategic partnership to expand thecompany."

Near North said that owner, Michael Segal, has signed a letterof intent to sell the brokerage operation to Frontenac, a $1billion private equity investment firm.

Mr. Segal was arrested in Jan. 2001 by the F.B.I on charges ofinsurance and mail fraud. He was charged with embezzling $20million from the firm's premium fund trust account.

His trial is scheduled to begin April 7.

John Harney, Near North's chief executive officer, in astatement, called the discussions "a natural step in Near North'sprogression." He added that the firm is "excited" over thepossibilities the merger would bring to the insurance broker.

For its part, Frontenac's Rodney L. Goldstein, managing partner,stated that Near North fits in with the investment firm's strategyto serve middle market insurance clients. He added that Frontenacplans to grow this segment of its business by acquisition of"significant size, scale and quality in property ? casualty,employee benefits and voluntary benefits" firms.

If the deal is completed, the new firm would be headed by DickRiley and Robert Goss, two former executives from Chicago ? basedinsurance broker Aon. They would be named chief executive officerand chief financial officer, respectively.

Frontenac said discussions about the merger began in late 2002after "a conversation" between Mr. Goldstein and WilliamBartholomay, president of Near North.

The two said they are currently in the due diligence phase ofnegotiations, and indicated that the close of the sale isimminent.

In addition to Chicago, Near North has offices in Dallas, LasVegas, Los Angeles, New York, Tampa, Washington, D.C. and London.It's Los Angeles arm is noted for brokering entertainment coverage,most recently securing cover for the half-time show for Super BowlXXXVII.

Terms of the deal were not disclosed.

Natalie Rofalikos, a spokeswoman for Near North said the firmscould not comment further at this time due to confidentialityagreements.