Legal Insurer ARAG Acquires Competitor

This is the second acquisition deal for ARAG Group in the past couple of years. In 2002, the company acquired LegalWise North America, a national legal insurance provider based in Tampa, Fla.

Further terms of the Advisory Communications Systems transaction were not disclosed.

"Overall, Advisory Communications Systems is a legal insurer and what it offers is similar to what we offer," said Paul Kluding, spokesman at ARAG Group. "And it has a business called LawPhone, which offers what we call a legal services delivery system."

ARAG Group, a legal insurance underwriter, primarily provides legal insurance as an employee benefit. "It's considered a voluntary benefit, so as employees sign up for their vision or dental, a lot of times they also have the option to sign up for legal insurance," Mr. Kluding explained.

This legal insurance provides individuals with unlimited access to attorneys for monthly premiums, and ARAG Group has a network of individually practicing attorneys who have contracted with the insurer to service customers.

ARAG Group, a privately held company, has some 500 corporate clients and serves more than a half–million individual customers.

Mr. Kluding said his company also sees much to benefit from LawPhone, part of Lanham, Md.-based ACS. ARAG, he said, hopes to expand into the employee assistance programs as well as Canadian business arenas, which are areas of expertise for LawPhone.

"LawPhone has had a lot of expertise in serving the employee assistance programs business?that's an area of legal insurance industry that we have not delved into in the past, but we want to expand into that. So their expertise there will help us."

Employee assistance programs, Mr. Kluding said, offer what can be described as employee help lines that most employers offer for free.

These services, he said, "deal with anything from financial help to personal matters and even legal assistance." Companies provide a toll-free number and a third-party organization usually manages the line, he said.

"In a way, it's a risk-management service," he noted. "It's a service to help employees resolve personal issues they may have before these issues get worse and affect their job productivity."

LawPhone also has a Canadian office in Vancouver, British Columbia, and Mr. Kluding said the Canadian business model is something ARAG Group can learn and grow from as well.

Jim Brennan, president of ARAG Group, said, "We're extremely excited about the opportunity this acquisition provides."

In particular, LawPhone has built "tremendous strengths in specific markets, and ARAG Group will reap the benefits by adding business from new corporate sponsorships," Mr. Brennan said, "while also expanding our product offerings and distribution channels."