Aon brokerage announced today it has signed a letter of intent to sell its Construction Program Group to the Old Republic Insurance Company for $85 million.
Greg Case, Aon president and chief executive officer, said the action continues the company's move to exit the specialty property and casualty underwriting businesses.
The Chicago-based firm also announced that it will strengthen specialty property and casualty reserves by approximately $100 million.
Aon said the transaction in addition to the $85 million for the group also involves the transfer of approximately $300 million of unearned premium and claim reserves currently on the books of Virginia Surety Company Inc.
The sale of CPG and the previously announced pending sale of Aon Warranty Group and Virginia Surety are anticipated to be completed in the fourth quarter of 2006.
A majority of the reserve increase relates to National Program Services (NPS), an independent managing general underwriter that wrote habitational risk on behalf of Virginia Surety, the company said.
Vito Gruppuso, the owner and former president of NPS brokerage firm, was convicted of criminal theft in 2004 in connection with NPS' actions with respect to Virginia Surety and other insurers in what authorities said was the largest insurance fraud scheme ever prosecuted in New Jersey.
The remainder of the specialty property and casualty programs have been placed in runoff, and Aon will continue to explore disposition alternatives for other portions of the book.
“We believe this will enable us to focus our attention and resources on our core businesses,” Mr. Case said.
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