Aon Corp. on Thursday announced the sale of its Swett & Crawford wholesale insurance brokerage–the nation's largest–to venture capitalists as the fallout from New York Attorney General Elliot Spitzer's probe continues to reshape the industry.
Aon thus became the third major insurance brokerage to sell its wholesale unit since Marsh, Inc. pledged in its $850 million agreement with the state of New York earlier this year, not to funnel business through wholesale brokers unless they get clients' approval beforehand.
Aon announced in February its plan to sell the unit. Announcement of the deal follows the Sept. 7 disclosure by Marsh of a deal to sell its Crump Group, Inc., wholesale brokerage operation, to an affiliate of J.C. Flowers & Co. LLC, a New York-based private equity firm. Willis Group also has announced plans to divest its wholesale brokerage unit.
Acquiring Swett & Crawford is a consortium that includes Hicks, Muse, Tate & Furst Inc., based in Dallas; Banc of America Capital Investors; and Emerald Capital Group, Ltd.
HMTF said "a number" of "key" S&C employees have also agreed to invest in the business as part of a "long-term professional commitment to the company." The stake will be "significant," HMTF said in a statement.
The parties expect to complete the transaction, financial terms of which were not disclosed, in 45 to 60 days.
Wholesale insurance brokers earn commission by arranging insurance coverage through specialty insurers for unusual risks on behalf of the retail brokers which deal directly with insurance buyers.
S&C, which works with more than 14,000 retail agents/brokers across the United States, said its employees are specialists in more than 30 insurance categories, including agriculture, biotechnology, builder's risks, energy, fraternities, medical malpractice, nursing homes, and casinos & entertainment.
Neal Abernathy, Swett & Crawford's president and COO, said, "We look forward to S&C becoming a stand alone company and are already planning several organic growth initiatives."
These include expanding S&C's producer base and underwriting capabilities.
Credit Suisse First Boston and Deutsche Bank acted as financial advisors to HMTF with regard to the transaction, and is also arranging the necessary debt financing.
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