Winterthur Sells U.S.-Based Republic Group

The company, which had been owned by Winterthur since 1982, has some 400 employees and distributes its products through a network of some 700 independent agents as well as through several specialty programs. In 2002, the insurer wrote gross written premiums worth $465 million.

The transaction, which is priced at $127 million in cash, is still subject to approval by regulators, but is expected to be completed in the latter half of this year.

The buyer of the Republic Group is led by Wand Partners Inc., a New York-based private equity investment group. It is also the sponsor of a group of investors that includes Banc of America Capital Investors, Greenhill Capital Partners, Brazos Private Equity Partners, 21st Century Group and Norwest Equity Partners.

Bruce Milligan, chief executive officer for the Republic Group, said this transaction would give his company more freedom to pursue other business lines.

"With Winterthur, we had to operate under certain parameters and operate more as a traditional company with traditional standard product offerings," Mr. Milligan told National Underwriter. But after the deal is completed, the Republic Group will look at many other opportunities, including various niche business opportunities in Texas and neighboring regions, he said.

The transaction has been in the works for the past six months, added Bruce W. Schnitzer, chairman at Wand Partners. Mr. Schnitzer said that the discussion started late last year, as part of Winterthur's own broad strategic divesting planning in the United States.

Since 1997, Winterthur has been the insurance arm of the Zurich, Switzerland-based financial giant Credit Suisse Group, which has been suffering from financial difficulties. Credit Suisse suffered a huge loss-making year in 2002, posting a net loss of 3.3 billion Swiss francs ($2.5 billion). But it has recently been showing signs of recovery. The company reported a net income of 652 million Swiss francs ($492 million) for the 2003 first quarter, nearly doubling its profit compared to the same period one year ago.

Further commenting on the deal, Mr. Schnitzer said that the Republic Group will continue to operate independently under its brand name after the transaction is completed.

"Our investor group is pleased to have the opportunity to support the leadership at Republic and looks forward to further developing the company's market position," Mr. Schnitzer said.