AXA has sold Winterthur U.S. Holdings to QBE Insurance Group for $1.16 billion cash, the second acquisition of an insurance company in the United States by the Sydney, Australia-based company in less than a month.
The transaction is subject to regulatory approval and is expected to close during the second quarter of this year, the companies said.
Winterthur U.S., based in Sun Prairie, Wis., is a property-casualty holding company operating General Casualty, based in Wisconsin, and Unigard Insurance Group, which is based in Bellevue, Wash. Winterthur U.S. writes its business through 1,700 independent agents in 33 states. The company said it recorded gross written premiums last year of $1.5 billion and employs 2,150 people throughout the United States.
Winterthur U.S.'s corporate status has been uncertain since Paris-based AXA purchased Winterthur Group from Credit Suisse Group in June of last year. AXA's business in the U.S. is strictly life and health, and the company at that time said it was conducting a strategic review to see what direction it wanted to take with the U.S. group. The rest of Winterthur fit with AXA's growth strategies in Europe and Asia.
Financing of the cash transaction will involve a combination of cash, dividend reinvestment and short-term debt, said QBE. The balance will come from an equity placement. The deal will also involve the repayment of intercompany loans by Winterthur U.S. to AXA amounting to $636 million. QBE said it would refinance the debt.
The move by QBE follows its announced acquisition of program business underwriter Praetorian in December for $800 million from Germany-based Hannover Re.
QBE said Winterthur U.S. will form part of QBE the Americas under Tim Kenny, president and chief executive officer.
The acquisition, said Mr. Kenny in a statement, "furthers our focused diversification strategy and completes our infrastructure needs and distribution requirements for the U.S. We now have a strong presence in specialist insurance programs, property and casualty insurance, and reinsurance, together with an increasing presence in Latin America."
John Pollock, president and CEO of Winterthur U.S., said the new alliance would bring opportunities and "QBE management respects our independent agent-based business model and feels we are an excellent strategic fit."
Rating agency Standard & Poor's said the sale would have no affect on AXA's rating.
QBE the Americas has headquarters in New York. It conducts business through eight companies in the U.S.: QBE Reinsurance Corp., QBE Insurance Corp., QBE Specialty Insurance Co., National Farmers Union Property and Casualty Co., and United Security Insurance Co.
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