Liberty Mutual Insurance announced Monday morning it will acquire global specialty lines company Ironshore Inc. from Fosun International Ltd. for approximately $3 billion.
The purchase price — which is subject to closing price adjustments — will equate to 1.45x Ironshore's actual tangible book value as of year-end 2016. The transaction is expected to close in the first half of 2017 pending regulatory approvals and customary closing conditions.
After the acquisition is completed Ironshore will continue to operate with the same management team and brand, but as part of the larger Liberty Mutual organization, which seeks to grow its specialty lines operations.
Ironshore, which was founded in 2006, had gross premiums written of $2.2 billion in 2015 and is one of the 10 largest E&S lines insurers in the U.S. The company, which has approximately 800 employees located in 15 countries worldwide, is organized into three operating hubs based in the U.S., Bermuda and London.
As of December 31, 2015, Liberty Mutual had $121.7 billion in consolidated assets, $102.5 billion in consolidated liabilities, and $37.6 billion in annual consolidated revenue. The insurer employs more than 50,000 people in over 800 offices throughout the world.
“We are pleased to have Ironshore and its proven management team led by CEO Kevin H. Kelley join Liberty Mutual,” Liberty Mutual Chairman and CEO David H. Long said in a statement. “Ironshore has a track record of profitably underwriting global and diverse specialty risks insurance and is an ideal complement to Liberty Mutual, providing additional scale, expertise, innovation and market relationships to our $5 billion Global Specialty business.”
“The combination of Ironshore and Liberty Mutual is a win-win proposition and value creating for both companies,” Ironshore CEO Kevin H. Kelley said in a statement. “Ironshore will become part of another 'A' rated company with a global reach, a strong balance sheet, wide client base and a much greater capacity to drive profitable growth.
“Today's announcement of the transaction is beneficial for all three parties involved and is the culmination of a careful and considered process,” Kelley added. “We have aimed for the best possible outcome for our employees, clients and business partners and are confident this transaction achieves these goals and more. … With more than $120 billion of assets, Liberty Mutual is a global Fortune 100 company with an A rating from A.M. Best, S&P and Moody's that gives us access to a larger balance sheet, additional product lines and greater reinsurance and underwriting capacity.”
Ironshore provides broker-sourced specialty P&C insurance coverage for varying risks throughout the world. Select specialty policies are underwritten through its Lloyd's syndicate.
Barclays Capital Inc. acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP provided legal advice to Liberty Mutual Insurance in the transaction.
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