Beazley Group plc, Lloyd's syndicates, announced it has acquired London-based Momentum Underwriting Management Limited, a personal accident and life underwriting management agency, in a transaction worth up to $37.5 million.
MUM, which began operations in 2000, also has an office in Australia and is led by founders Christopher Branch, Martin Power, Marc Frost and Mark Edwards, Beazley said.
MUM plans to underwrite around $100 million of gross premium for 2009, and Beazley said its support gives MUM new growth opportunities.
The transaction, which is not expected to have a material earnings or net asset impact in the near term, is consistent with Beazley's strategy to continue to diversify its portfolio of specialist business into niche international markets which benefit from high barriers to entry, Beazley said.
MUM will continue as an agency, with Beazley's share of the business underwritten by two new Lloyd's syndicates. In addition, Beazley will be supporting MUM in their plans to establish local operations in the United States, expanding Beazley's U.S. presence and underwriting reach.
Beazley said it will use its own internal cash resources for the transaction, which involves an upfront cash payment of $15 million (?8.2 million) payable upon completion, subject to the net asset adjustment, and further deferred payments of up to $22.5 million (?12.4 million) payable in installments between 2012 and 2014.
The amount of the deferred consideration is subject to the profitability of the business during the 2009, 2010 and 2011 years of account. For the financial year ended Dec. 31, 2007, MUM reported audited consolidated profit before tax of ?500,000 and gross assets of ?2.6 million.
The transaction is subject to the approval of Lloyd's and the Financial Services Authority.
"We are delighted to welcome Chris and his team to Beazley," said Beazley Chief Executive Andrew Horton. "We have been tremendously impressed by the profitable business which he and his colleagues have built over the years, and we look forward to providing them with the support and tools to accelerate their already impressive development.
"This acquisition reflects our ambition to continue to develop our specialist expertise in sophisticated underwriting markets and represents a strong strategic fit. It provides an excellent opportunity for Beazley to access new business that complements our existing portfolio."
Chris Branch, chairman and managing director of MUM, said, "We look forward to working with Beazley to enhance and develop our current product offering. This exciting development provides an excellent platform for future growth."
Beazley, Syndicates 2623 and 623 at Lloyd's, focuses on writing specialty-risk insurance and reinsurance business in markets, such as marine, arts and jewelry.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.