It's well understood in the business world that there are two basic ways to grow: buy or build. Given the flurry of merger and acquisition activity in 2015, many insurance companies seemed to think that buying was the way to go. It's too early to tell whether M&As will be a trend for 2016 as well, but one company has joined the group of buyers.
Connecticut-based Hartford Financial Services Group Inc. announced today that it has chosen to grow by acquisition and has agreed to purchase Northern Homelands Co., the holding company of Alpharetta, Ga.-based Maxum Specialty Insurance Group, for $170 million in cash.
“Today's acquisition supports The Hartford's strategy to profitably grow our business by investing in the product, underwriting and distribution capabilities that are making us a broader and deeper risk player,” said Doug Elliot, Hartford's president. “The addition of Maxum, a well-respected excess and surplus lines company, accelerates our efforts to build upon our market-leading position in Small Commercial by expanding our product offerings and capabilities.”
Maintaining Maxum's brand identity
The plan is for Maxum to maintain its brand and limited wholesale distribution model and to be managed as a separate unit within Hartford's Small Commercial business. In addition, all Maxum employees will be offered continued employment at the close of the transaction, and Maxum will remain headquartered in suburban Atlanta.
“We are pleased to join an iconic company with a proven ability to adapt and redefine itself to remain relevant to customers and distribution partners,” said Maxum CEO Marshall Turner. “We believe that as part of The Hartford we will have a stronger value proposition and greater opportunities to expand our products and market position. I would like to thank our customers and colleagues for the hard work and dedication that has allowed us to create a quality excess and surplus lines platform that is poised for continued success.”
The transaction, which will not have a material impact on Hartford's financial results, according to a prepared statement, is expected to close in the third quarter, subject to obtaining regulatory approvals and other customary closing conditions.
More detail about the transaction can be found on Hartford's investor relations website.
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Rosalie Donlon
Rosalie Donlon is the editor in chief of ALM's insurance and tax publications, including NU Property & Casualty magazine and NU PropertyCasualty360.com. You can contact her at [email protected].
