White Mountains Buys AIG Subsidiary
A wholly owned subsidiary of White Mountains Insurance Group Ltd. (WTM) – White Mountains Solutions Holding Company Inc. in association with the group’s specialist runoff acquisition business acquired American Fuji Fire and Marine Insurance Company. The deal announced in Dec 2012, has been pending regulatory approval from the Illinois Department of Insurance.
The Fuji Fire and Marine Insurance Company is a small runoff subsidiary of the American International Group (AIG).
White Mountains Solutions provides acquisition and management of runoff liabilities for insurance and reinsurance companies both in the United States and internationally. The deal is expected to fortify White Mountains’ existing portfolio thereby enhancing the company earnings.
Since its inception in 2004, White Mountains Solutions has implemented eleven transactions thereby generating an after-tax income of approximately $163 million as of Dec 31, 2012. Adding to these efforts, White Mountains Solutions entered into a deal to acquire the runoff insurance subsidiary of Leucadia National Corporation (LUK) – Empire Insurance Company in Feb 2013. The deal is expected to culminate during the second quarter of 2013 pending customary closing conditions and regulatory approval from the New York Department of Financial Services.
White Mountains has been following an inorganic route of expansion, mainly through acquisitions and is left with a cash balance of $212.6 million at year end 2012. We expect the cash balance of the company to be strong enough to support its endeavors.
Earlier this month another property and casualty insurer, ACE Limited (ACE) acquired Fianzas Monterrey from New York Life Insurance Company for a cash consideration of $293 million. The deal was undertaken to expand the surety business of ACE.
White Mountains currently carries Zacks Rank #3 (Hold).
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